Decision that's just not cricket

Just as well that insurer Britannic is no longer sponsoring a major cricket championship. After last week's decision to waive payment of annual bonuses on with-profits policies and final dividends to shareholders, it needs to keep a low profile. Associations with a sport that is such a source of discomfort to the national psyche would be a constant source of jibes. Britannic might even want to rethink the name of its annuity division, Britannic Retirement Solutions, which now seems cringeingly inappropriate.

Britannic is not in the same parlous state as Equitable Life but a decision not to pay annual bonuses is a sign of distress for a with-profits company. Annual bonuses are the foundations of with-profits products because, like interest on a savings accounts, they pro vide vital compound growth to the investment. The depth of Britannic's distress took the financial community by surprise and it will be little consolation to policyholders that shareholders are sharing the pain in the form of passed dividends and a slump in the company's share price.

The news will further dent confidence in the financial services industry, with-profit investments and the financial system in general. With-profits investments are a fine idea in principle but insurance companies have played fast and loose. They have increased the element of chance in taking out a with-profits investment by paying increasing proportions of maturity values in the form of terminal bonuses - which are entirely discretionary - rather than annual bonuses. If annual bonuses are now being waived, even temporarily, the prospects for terminal bonuses, which have accounted for as much as 60 per cent of final payouts, can only be guessed at.

For this reason it may now be appropriate for policyholders with endowment and savings plans whose policies are a few years from maturity to consider whether it is worthwhile continuing to pay into their plans or to surrender them. The same exercise can be performed with pensions but is more complicated, as you must transfer your fund to another provider.

No one should surrender or transfer without obtaining a forecast of possible maturity value, measuring it against premiums yet to be paid and the cash-in, or transfer value being quoted. But the Churchillian 'never surrender' attitude to a with-profits investment is starting to look a bit outdated.

· If you do one thing this month to sort your finances for the New Year, check returns on savings accounts. Cash is the only sure-bet investment at the moment and researchers at Which? magazine calculate that, collectively, UK savers could be £5 billion better off if they switched out of poor paying accounts.