LIFE assurer Standard Life heaped more bad news on beleaguered investors by announcing it was slashing payouts on its long-term savings policies by about 15 per cent.

The mutual blamed "extremely difficult investment conditions" for the third reduction in bonuses on life and pensions with-profits policies in just over a year.

It also warned there was likely to be more pain to come, with future investment returns looking set to be lower than those seen in the past and bonus rates likely to continue falling.

The society is the latest in a long line of life insurers to cut bonuses on with-profits policies.

Insurers first began reducing them about 18 months ago, and since then Prudential, Norwich Union and Scottish Widows have all reduced them three times in just over a year, while Britannic recently announced it was deferring its annual bonuses.

With-profits policies aim to smooth out stock market volatility throughout the course of an investment, withholding some growth in strong years to pay returns in bad ones.

The policies are often taken out as pensions, as an endowment policy to pay off a mortgage, or as a lump sum investment in the form of a with-profits bond.

But they have been hit by three consecutive years of stock market falls, forcing insurers to cut bonuses to reflect reduced investment returns.

The move by Standard Life will reduce the maturity value of a 25-year savings policy into which £50 a month had been paid to £75,984, if it matured today, from £89,537 before the cut was announced.