Norwich Union Ireland is maintaining annual bonus payments on life and pension policies in 1998 and is increasing terminal bonuses bonuses payable on maturity, death or encashment on all qualifying policies. The annual bonus on withprofit life policies will be maintained at 2.5 per cent of the capital sum guaranteed plus 4.5 per cent of bonuses already built up. On pension policies, the annual bonus will be 2.75 per cent of the capital sum guaranteed plus 5 per cent of built-up bonuses.

Terminal bonus payments reflect the capital appreciation on investment returns over the life of a policy. The size of the bonus varies depending on the length of the policy. Norwich Union expects to pay out more than £85 million on maturing policies in 1998 compared with £30 million in 1997.

There will be a 9 per cent bonus on unitised with-profits pension policies in 1998 while the bonus on unitised with-profits ordinary business will be 6 per cent. the price of a pension unit will be nine 9 per cent higher at the end of 1998. Bonuses declared by life assurance companies reflect investment performance and the prospects for future investment performance. Bonuses are added to policy-holders funds except for unitised policies where they are reflected in the increase in unit prices.

The maintenance of the annual bonus and the increase in the terminal bonus at Norwich Union Ireland follows the recent announcement that its British parent is to cut bonuses on life policies.