An offer letter is not a contract, but may attempt to clarify certain mutual expectations that you should be aware of. I can't remember the specifics of all of my offer letters, but I do recall similar language to what you describe.
I've worked for a large software company that changed their review process from semi-annual to annual about five years after I joined. In the original semi-annual plan, a raise and bonus were roughly equally likely for either review, and both reviews had numerical scores. Later, they switched to an annual plan where the mid-year review usually had no meaningful score and a mid-year raise or promotion became a somewhat unusual scenario, but the potential bonus and raise impact of the annual review doubled. Bothering with the specifics of that plan was already more detail than was worth putting in the offer letter since companies change the specifics of their policies frequently. The important thing was that there was a scheduled review process at all.
I have worked for some companies that had no such regular process, and you were highly unlikely to get a raise unless you were also promoted, or if you basically had a competing job offer in your hand and you were so critical to the company that your manager felt compelled to make a counter-offer.
I've really only seen companies reduce salaries under extreme circumstances, and then, only when their employees were relatively unlikely to find better employment options elsewhere. Reducing pay was commonly practiced by the Carnegie steelworks especially when people were paid using piecework style compensation, but it's highly unusual in companies that have employees with plenty of other options. I observed Microsoft cutting agency temporary and vendor pay once, during a particularly nasty economic downturn (somewhere in late 2008 or early 2009), but I'm fairly sure the effort reduced the number of people willing to ever consider contracting for Microsoft ever again, so I doubt many companies would be willing to try that very often.
I also worked for a different company during that same time period whose client exercised a clause in the contract that required a reduction in the cost of the contract, which led to an ultimatum to accept a pay cut or leave; the company lost several people immediately and only retained the rest because a month later most of the people who accepted that short term pay cut received full time offers from a joint venture that had been in the works during contract renegotiations. This was only possible due to the rather poor economy and the slightly limited options available to rapidly change employers; any other time and they might have lost 50% of their workforce within 3 weeks. But attrition would have net them the same result when the goal of reducing cost was more important than team capacity.
It's worth pointing out that an offer letter is not the final word from an employer before you start. If you have questions about company policy, ask the recruiter or the person who sent you the offer letter. If you want to know what their actual routines are, it's usually ok to politely inquire about such details once you have an offer in your hand.