Members of employer-sponsored retirement funds that are invested in Old Mutual's smooth bonus Guaranteed Fund have reason to celebrate. The fund has declared its highest bonus rate and real total return since the inception of the portfolio almost 40 years ago.
The record-breaking bonus payout, of 26 percent, to retirement funds comes on the back of the soaring equity markets of the past three years.
The guaranteed (vesting) portion of the bonus declared to June 2006 is 10 percent. In other words, 10 percent of the 26 percent is added to the guaranteed part of your retirement savings.
The balance of 16 percent is a non-vesting bonus, which can be removed under very adverse market conditions. Old Mutual has not stated how much of the fund's investment growth has been held back in its bonus stabilisation reserve to smooth out future market fluctuations.