PwC With-Profits Survey 2025

Our thanks go to the firms which took part for kindly sharing their time and their insights. We hope you find the report useful and look forward to discussing the featured themes with you.

The output from this survey is relevant for everyone focused on the strategy and value of running with-profits businesses.

If you have any questions regarding this survey please contact one of our team.

Investment Strategy

Investment strategy continues to be a key area of focus, as firms respond to the ongoing challenges of weak economic growth, sustained high interest rates and moderating inflation. This year’s survey highlights:

• Continued shift away from government bonds:
  The trend observed in our 2023 survey of moving out of government bonds in favour of property and equity investments continues. This indicates that businesses may remain cautious of the impact of sustained higher inflation on fixed income returns. We have observed 11 funds that investment in non-traditional fixed interest instruments. This generally remains within a low proportion of asset mix sitting below 15% of each fund’s portfolio, with one outlier at 30%.
• Equity exposure remains diverse:
  Most with-profits funds continue to invest less than 50% of their equities in the UK. This reinforces the ongoing trend of geographical diversification; although further diversification may benefit the few funds with larger proportions invested in UK equities.
• Alignment with long-term planning:
  Several participants indicated that changes to investment strategy are being considered as part of broader long-term planning such as preparing for a potential fund wind-up. Considerations around the wider strategic lifecycle of funds need to be balanced against the long-term returns to policyholders.

Goneaways

Goneaways continue to be a significant area of focus for with-profits funds, with participants reporting a total of c.3m goneaway policies, with a value exceeding £5 billion, representing around 3% of total with-profits liabilities in the UK market. These figures are likely to be understated given the challenge of knowing when a customer has lost contact, and these figures will continue to rise without a significant change in tracing success.

The approach for managing unclaimed assets varies between businesses, particularly how and when the unclaimed assets are redistributed back to policyholders. Firms continue to balance reserve setting as overstating reserves can delay distribution and understating reserves risks unexpected claims. There is an opportunity to develop a collaborative financial solution to provide greater finality in the liability, allowing firms to have greater confidence in distribution while ensuring customer fairness and transparency.

Consumer Duty

The FCA's Consumer Duty continues to shape how with-profits funds assess and deliver value to policyholders, aligned to the four outcomes: products and services, price and value, consumer understanding and consumer support.

Our survey results indicate that firms are assessing fair value using a mix of quantitative and qualitative indicators, including service quality, investment performance, charges and benefits. We have also considered the broader product reviews, which we observe are performed at varying intervals depending on the product line and risk assessments. Common focus areas identified to improve customer outcomes relate to data quality, identifying vulnerable customers and improving management information (MI) and key performance indicators (KPIs). Although a variety of improvement areas were noted across participants, the quality and quantity of data is highlighted as a common improvement area, reflecting the importance of high quality data in demonstrating Consumer Duty compliance.

Approaches to measuring customer understanding are evolving, with a shift towards data and technology-driven monitoring, however there is wide variation between participants.

Consistent with our 2023 survey, only a minority of participants are prospectively assessing total expected performance over the lifetime of a product as part of their fair value assessments.

Whilst some progress since our last survey is evident, the 2025 survey results show considerable variation in approaches to fair value assessment and monitoring, providing good outcomes to policyholders and measuring and monitoring customer understanding, suggesting that these will remain areas of focus going forwards.

With-profits methodologies and processes

We have explored participants' core with-profits methodologies and processes – covering Risk oversight, asset share methodology, expense methodology, grouping for bonuses and surrender value methodology. We have observed that Risk teams are becoming more involved in customer-focused areas, a trend that may continue given the importance of Consumer Duty.

Payouts and charges

Finally, we examined current levels of expenses or charges. Conventional with-profits whole-of-life products showed greatest variability across participants, which may be due to differences in legacy pricing structures. Since our 2023 survey, expenses have remained broadly stable as a percentage of asset share across products.

We have observed larger funds benefitting from economies of scale, applying lower percentage charges, while smaller and medium-sized funds show greater variability in charges.