Mortgage Endowment Promise (MEP)

Arkers · 15 July 2016 at 2:04PM

Just a quick question for those who may know. I have two endowments due to mature in 2018 and 2019. Both with different companies (Aviva - originally General Accident, and Standard Life). Both of these discuss in the literature a MEP. The amounts payable are estimated it could be a higher then the cited figure lower than, or nothing at all. Well at least for Standard Life. The GA figure appears to be a lot more in terms of the promised amount then S.Life yet the endowment is less.

Do these MEP pay out? and if so, is it the higher amount or lower amount?

I find these promises a bit vague, so wondered if anyone could shed some light on it all for me.

Thanks

Arkers

dunstonh · 15 July 2016 at 4:01PM

Do these MEP pay out?

Yes

and if so, is it the higher amount or lower amount?

It depends on the rate of return.

I find these promises a bit vague, so wondered if anyone could shed some light on it all for me.

They are quite straightforward but in simple terms, there is a maximum that will pay out with Aviva and Std Life. This results in a range being given of what it could be. However, it is not possible to know what it would be until you get to maturity.

So, the promise is not vague. The process is defined. Its just that you cant know the actual figure until maturity. Just a rough guide.

elmer · 15 July 2016 at 5:55PM

My MEP with Standard life added 20% to our final value in May, we still were £8000 short, but had budgeted for it since 2000 so the mortgage is paid off.

SL gave us a final figure a month before, but only a range for the MEP, we had to wait for the plan to end to see how much was added.

elmer

timrowlands · 16 July 2016 at 1:17PM

elmer wrote: »

My MEP with Standard life added 20% to our final value in May, we still were £8000 short, but had budgeted for it since 2000 so the mortgage is paid off.

SL gave us a final figure a month before, but only a range for the MEP, we had to wait for the plan to end to see how much was added.

elmer

I have a Standard Life Homeplan due to mature in March 2019. It was taken out for 25 years with a target amount of £41,000. Monthly premium is just under £60. Mine is invested 50/50 in Unitised with profit / Managed, so I do qualify for MEP.

I am also curious as to how much this MEP may be. Current surrender value online shows as just over £25000, including terminal bonus of around £4000. With another £2000 of premiums and some modest growth, it should be worth around £30000 at maturity. I'd be very happy to get 20% of this added at the end. By the time the demutualisation shares (which I still hold) plus dividends are factored in, it won't be that far short of the target amount.

Elmer, how did your MEP compare to the range that you were quoted on your annual statement?

elmer · 17 July 2016 at 11:46AM

Eek, a technical question, I'm sorry, i don't know, they put my statements on line a few years ago, and I was unable to access them after that.

I did discuss the whole issue including the MEP with a standard life advisor 3 years ago, who wouldn't commit to anything, but gave me an indication that £20, 000 including the MEP was a likely figure, and we received £20 800, so she wasn't far out.

I called them again in April and they gave me a range of 2400 to 3200 for the MEP, and we received just over £3000, so towards the top of the range they told me.

We used the extra £800 for a holiday and as our mortgage is finished I was happy, even though it was £8000 short on their predictions 25 years ago

sorry I can't help with the statements

elmer

cazscash · 1 June 2017 at 7:51AM

Ive been reading a lot of threads myself and trying to work out my MEP for a Standard Life Endowment due this month. Some have been paying out at about 60-65% of the shortfall, but in most cases they are understating this on the prediction statement.
I am counting the days to payout and will post details next week. Thankfully mortgage cleared a number of years ago after taking action.
Dunstonh, have appreciated your many comments on other threads relating to Endowment payouts.
Hopefully my figures will help others in trying to predict final payout.

dunstonh · 1 June 2017 at 9:45AM

Some have been paying out at about 60-65% of the shortfall, but in most cases they are understating this on the prediction statement.

The statements are not a prediction and should not be considered as such. They are projections using a range of assumptions. Those assumptions may or may not be reasonable assumptions. Some endowment projections use assumptions way below the likely outcome. For example, the projection percentage is before charges. So, if you have a 2.5% growth rate, it does not mean 2.5% net. it means 2.5% before charges. So, if charges were, say, 1.5% and your plan has been averaging 4% growth a year then a projection rate to match that would be around 5.5%

Std Life do tell the servicing IFA what the MEP range is for any plan that is on their agency. So, if you have your plan on the agency of an IFA, you could ask them to find out for you.

cazscash · 1 June 2017 at 11:27AM

Thanks Dunstonh, some of that a bit over my head. No IFA involved so no charges that I'm aware of, hopefully money hitting the bank in the next few days. Standard Life have sent out maturity value without MEP calculation, this should have been done yesterday :j

dunstonh · 1 June 2017 at 11:40AM

No IFA involved so no charges that I'm aware of

The plan has built in charges. These would be from the days before explicit disclosure but they are there. It doesnt matter if you had an IFA or it was bought direct from SL.

The key thing is that when the projection gives a growth rate of x%, it doesnt really mean a net growth rate of that amount. i.e. if growth rate is 4.4% on the projection that its likely to be closer to 2.9% growth.

AndiDy · 3 April 2019 at 11:49AM

I'd been looking for information online about my MEP for my Standard Life endowment and came across this thread. My endowment has now matured and I have the final figures.

I took out a home plan with Standard Life 25 years ago and it matured on 1st April 2019. It had a target amount of £56,000 and I paid £78.96 per month.

In April 2018 the fund value was £28,651 with a bonus of £11.421.98 so a total value a year before maturity of £40,072.98. I was told the estimate of my MEP was between £3,120 and £4,680 but it could be nil.

The final maturity figure is £49,842.22 which includes a MEP top up of £7,800, so quite a bit more than the estimate. So whilst I'm £6,157 short of my original target amount, I am still pleasantly surprised by the maturity value, because I thought it was going to be about £46,000.

Arkers · 3 April 2019 at 12:35PM

Nice one AndiDy, our SL homeplan is due to mature on 1 July, and the maximum MEP has been estimated as a max of £4100, and the last time I spoke to an employee of Standard Life they indicated that they were paying out the MEP at 100%. It appears (although I'm not holding my breath!) that it might be more then the highest estimate.

Thanks for the update, and I hope you enjoy the money if you are not using it for your mortgage.

I'm keeping everything crossed xx

Arkers x

Mortgage Endowment Promise (MEP)

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