Life assurer Standard Life has announced it is doubling the exit penalty paid by policyholders who take their funds away from the society early.

The mutual said it had been forced to take action after the number of people surrendering certain with-profits policies doubled last week.

Under the move, people moving a unitised pension away from the society before its maturity date will see 25 per cent knocked off the value, while people with conventional life policies will lose 20 per cent.

Other types of life and pension policies will face similar reductions, at least double the previous penalty of ten per cent.

Group finance director John Hylands said: "Despite the reduction we applied to withdrawal values in September last year, there was still a significant difference between the amount being paid to customers and the market value of the underlying assets.

While surrender activity remained low, this did not represent a significant issue.

"However, we have recently seen a significant increase in surrenders.

"For this reason we have taken action now to protect the majority of customers who intend to remain fully invested."

Standard Life is expected to heap further bad news on its 2.1 million UK with-profits customers when it announces annual bonus rates for the policies on February 3.

In September, when the society also reduced rates, it warned that unless stock markets picked up the future direction of bonuses was likely to be down.