It has been reported in recent press articles that Norwich Union may abandon plans to pay windfalls to its policyholders after the stock market slide slashed the value of its spare capital. The pay-outs were to be made by NU's parent Aviva from surplus capital that had built up in its with-profits funds over many years. Last year, the insurer approached policyholder advocate Clare Spottiswoode to help decide what to do with the spare cash. Spottiswoode lobbied hard for significant payouts to policyholders and Aviva said in July it would hand out windfalls averaging about £1,000. But the plan could be scrapped after the crash in stock market values hit Aviva's capital assets and eroded the pile of surplus capital.

We will continue to monitor the position and keep clients informed however in the interests of protecting terminal bonuses and in the knolwedge that TB's are already starting to fall due to the prevailing economic climate more immediate action may be necessary in certain circumstances.