HALF of Standard Life's 1.5 million with-profits customers will see their investment return squeezed again this year, hit by a second successive reduction in bonus rates and a 50% cut since 2010.

While shareholders in the insurer demutualised five years ago have enjoyed a total return of 30%, with-profits policyholders have suffered regular bonus cuts even when the funds backing them have performed positively.

Last year the unitised policies fund earned 2.9%, following a return of 13% in 2010, yet customers in unitised life plans saw their bonus rate cut from 1.5% to 1.25% last year and will now see it slashed to 0.75%. Savers in unitised pension plans will see their bonus rate reduced from 1% to 0.75%, following the steep cut from 1.5% last year. In all some 750,000 policyholders are affected or half of the insurer's life and pensions customer base.

Even Standard's protected policyholders, with guarantees of at least 3% growth a year for life plans and 4% for pensions, will only get their minimum entitlement despite a return of 8.7% last year from the largely fixed-interest fund backing their policies. Bonus rates on with-profits bonds, which returned 1.8% over the year, have been held at 2.5%.

Standard also revealed that of its 500,000 endowment mortgage customers, 98% are still in the "red" zone, with a savings plan highly unlikely to meet its target.

Margaret Flaherty, Standard Life's with-profits communications manager, said: "Despite the very unsettled market conditions we have seen over the last year we are pleased to say that most customers will see a year-on-year increase in the value of their plan.

"We have reduced the bonus growth rates for some plans from today to maintain investment flexibility over the long-term. For many customers the guarantee continues to be a very attractive element of their investment."

Patrick Connolly, certified financial planner at AWD Chase de Vere, commented: "Despite Standard Life trying to dress it up, the reality is that we have seen a further round of bonus rate cuts for many policyholders and policy payouts also reduced.

"This trend has been ongoing for several years and looks likely to be repeated in the future, almost regardless of how the underlying Standard Life with-profits fund performs."

The traditional marketing weapon of the with-profits insurers, the 25-year pay-out on a £50 a month endowment, is now £28,439, compared with more than £100,000 a decade ago but more relevantly well below the current payout from its major rivals.

Standard is the first to declare its bonus rates, amid expectations that the likes of Aviva, which paid bonus rates of around 3% last year, will maintain the pay-out. Only 3% of mortgage endowments at Aviva, however, are on track, and many small with-profits funds pay no bonuses at all.

Standard Life's conventional life and pensions policies are paying 0.25% on the sum assured and 0.35% on attaching bonuses.

Mr Connolly said: "Unfortunately the days when Standard Life was considered to be one of the very best providers of with-profits investments are long gone. Their payouts are now some way behind the likes of Prudential, Legal & General and Aviva and it doesn't look like they will be able to pull this back."

Shareholders, however, can expect an upbeat assessment from chief executive David Nish when he unveils new business results next week.

Ms Flaherty said: "How this review affects customers depends on many factors. We write to our customers each year to give them details of their plan, including bonus rates and up to date plan values."

Mr Connolly added: "Existing investors should take stock of their position although for many policyholders the best advice may still be to stay put and to prepare themselves for the possibility of more disappointing news next year."