With-profits: Reduce regular or terminal bonus?

[Retrieva]

I am trying to understand which one is more likely to be reduced first between reducing regular bonuses and reducing terminal bonuses eg after equity market fall. Do with-profits funds typically reduce the terminal bonus as the first and most used of the 2 options?

I appreciate that both can be done simultaneously and that smoothing will be involved but I want to understand which one is more likely to be used first or if we were trying to choose only one of them.

This will help deepen my understanding. It may also help me when structuring my answers.

 

[Ekta Mehta]

According to me, you're right companies could choose to reduce terminal bonuses first and then move to regular bonuses if required.
This is mainly because companies wish to keep regular bonuses consistent and refrain from too much change as it would go against PRE and PH's perception of the company's past experience.
This has also been something we do in practicality at work.

Would request others to correct me or add on to the points if something more relevant

 

[Retrieva]

Thanks Ekta. This makes sense.