Insurance giant Aviva has frozen or cut annual bonus rates for its 1.5 million with-profits investors.
The group said annual bonus rates for new business are being held at 2.5% for bonds, 3% for pensions and 2.75% for stakeholder pensions. Annual bonus rates also remain the same for most existing unitised life and pension business.
However for the 27,000 savers in ex-Commercial Union bonds, annual bonuses have been cut from 2.5% to 2%, while the 24,000 savers in ex-Norwich Union bonds without a guaranteed bonus have seen a drop from 1% to 0.75%.
Aviva said that a bond invested a decade ago will have outperformed an average savings account. It said that a £10,000 with-profits bond purchased 10 years ago is now worth £17,082, giving customers an annual return of 5.5%. The same amount of money invested in a typical savings account would have grown to £12,228 over the same period, Aviva said.
Patrick Connolly, certified financial planner at AWD Chase de Vere, said Aviva's bonus announcement would come as a "disappointment" to many policyholders.
He said: "This is bad news for policyholders, but it is important to put Aviva's performance into context. Policyholders with Aviva won't be jumping for joy and may be questioning whether to retain their investments, but their situation would be much worse if they were stuck with one of the poorer performing with-profits providers."
With-profits products are a type of pooled investment fund which is intended to give greater protection for relatively cautious customers who want to invest in the markets but do not want to be exposed to the full impact of market conditions.
They have traditionally been the bedrock of private savings for many people who are looking for higher returns than a bank or building society savings account. Returns on savings accounts are particularly poor at the moment because banks are getting cheap finance from a Government scheme which is designed to encourage lending, which has made lenders less reliant on the need to attract deposits from savers.
Aviva said that investment markets have remained "volatile" over the last year and the challenging economic backdrop has highlighted the value of the "prudent approach" it has taken to managing with-profits funds.
The insurer's propositions and pricing director, savings and investments, Tim Orton said: "Our with-profits funds continue to perform well for our customers. With bank and building society accounts yielding low returns and stock market volatility an ongoing concern, the great strength of with-profits is its ability to invest in assets that provide income and growth whilst protecting from the full effects of volatile markets."