Royal Sun Alliance Endowments?

JohnG

Re: Royal Sun Alliance v's Pheonix & london Assurance

This is my first post as I can't locate any relevant information regarding the above company/ies and the situation following the apparent takeover? We've have just got a letter from the Phoenix advising of potential additional costs relating to "GUARANTEES" and "TRANSFER OF SOME ANNUITY POLICIES" and, surprise surprise, the "IMPACT IT WILL HAVE ON YOUR WITH PROFITS POLICY".

What does this all mean to people like us who unwittingly/foolishly took out With Profits Endowments in good faith twenty odd years ago? We have already been hit hard by Equitable with my pension, then earlier 10-12K shortfalls with Royal Sun Alliance Endowments and now it appears there's further penalties, especially to people who took the "SAFER" option of With Profit policies?
We have only just sorted out our mortgage with an offset arrangement, using all our savings, to overcome the shortfall and now it looks like we might have to dig even deeper! :mad:

I can't believe how many times we have been on the receiving end (there are other examples which I won't go into) especially as we have always tried to take the safe option when taking out financial polices - We have tried to get help through the ombudsman but found them very unsupportive.

Anyway, any advice on what the above means financially regarding this situation with Phoenix & London would be gratefully received - Meanwhile there could be a large explosion heard in this vacinity very soon.... :mad:

EdInvestor

Hello JohnG

Commiserations.

Here's a thread relating to another victim.

http://forums.moneysavingexpert.com/showthread.html?t=102229

If you'd like to post the same figures, we can take a look.

As well as the surrender value, if you can show the "Current value" that would be helpful.

The guaranteed sum assured and declared bonuses are important.When they say there are costs related to guarantees - these are some of the guarantees they mean.It's not impossible that you could be a winner in this situation - whereas new younger investors would be the losers. The situation at Equitable was much the same.

We need to see the figures to get an idea.

JohnG

Many thanks, I will get back to you with details a bit later - I've got to go and lie down for a bit to let my blood pressure receed.....

JohnG

Here are the figures etc, hope it makes sense (Three seperate policies covering 46,000 mortgage)......

1.
Company = Royal Sun Alliance
Fund(s) it's invested in: With Profits
Target amount = £30,000
Guaranteed sum assured and declared bonuses so far: = £10,890
Current value = £8325.77
Guaranteed value = £19,215.77
Surrender value = £15,216.00
Monthly premium = £41.58
Maturity date = 13/05/2010

Growth Rate.....................3.75%.................5.25%
Projected final amount.......£21,300.00...........£22,700.00
Projected Shortfall............£8,700.00.............£7,300.00

2.
Company = Royal Sun Alliance
Fund(s) it's invested in: With Profits
Target amount = £8,304.00
Guaranteed sum assured and declared bonuses so far: = £3,015.00
Current value = £5,320.19
Total Guaranteed value = £19,215.77
Surrender value = £4,202.00
Monthly premium = £12.25
Maturity date = 13/05/2010

Growth Rate......................3.75%................5.25%
Projected final amount........£5,910.00 ...........£6,290.00
Projected Shortfall.............£2,394.00...........£2,014.00

3.
Company = Royal Sun Alliance
Fund(s) it's invested in: With Profits
Target amount = £8,000.00
Guaranteed sum assured and declared bonuses so far: = £3,128.00
Current value = £1,513.52
Total Guaranteed value = £4,641.52
Surrender value = £3,408.00
Monthly premium = £12.25
Maturity date = 01/10/2010

Growth Rate.................3.75%..........................5.25%
Projected final amount....£5,000.00.....................£5,320.00
Projected Shortfall.........£3,000.00.....................£2,680.00

Having spoken to this Phoenix company today they confirm that they have increased a previously advised annual charge covering expected costs of “Guarantees” from 0.5% to 0.9% plus the maturity charge is to be increased from 5% to 9%.
They blame the reasons for these additional charges down to two things, firstly policyholders who exercise their guarantees and secondly due the transfer of annuities to Canada Life and the fact that people are generally living longer! :rotfl:

Comparing the previous projected final amount with the latest figures it confirms that we are potentially an additional £2,000 to £2,500 short – I simply can’t believe this keeps happening!. To me it smacks of daylight robbery but somehow I have to try to accept the fact that I entered into a “With Profits” arrangement which also means “Without Profits” and even “With Additional Penalties”, it’s just a great pity they didn’t explain this when they sold the policies in the first place. :mad:

Anyway, I suspect it would still be better to keep the policies going to get the maximum return but it’s just frustrating, to put it mildly, that they keep whittling away the projected amount every year, it’s as though they say, “Oh no, we have got more shortfalls and costs, I know let’s take some more from those mugs with their pathetic “With Profit” policies, that’s always good for a laugh”. In fact I would be much happier if it were more prudent to surrender the policies and get free of them altogether.

Any advice would be much appreciated (Apart from calm down – yes I know :wall: )

EdInvestor

Hello JohnG


Let's say you surrendered all these policies now and put the money in the bank @4% also paying in the premiums to maturity. You would then get at maturity:

Policy 1) 21,301 (guaranteed value 19,215)

2) 6,108 (GV 5320)

3)4,943 (GV 3641)

[Your figures are a little confusing so I hope those G/Vs are correct.]

Now at maturity they are only required to give you the guaranteed value, so you can achieve better than that by going now, on the assumption that Phoenix will attempt to limit the growth to the GV. BUT of course life cover is included - would you need to replace this if you surrendered the policies? if so, you'll need to factor in the cost.

What interest rate are you paying on your offset mortgage? If you were to surrender now and place the money into the offset account,you will no doubt make a higher return than 4%.

I strongly doubt that you will see these policies getting much past their guaranteed value at maturity. This is a zombie fund and as you can already see, "death by a thousand cuts" is a stock in trade and could be repeated ad nauseum down to the G/V level.

You may feel happier to get out of their clutches: if you decide to stay and don't expect any more than the GV at the end, then I expect there aren't too many more nasty surprises they can deliver.

JohnG

Many thanks Edinvester, I am extremely grateful for your feedback. I will go away and have a close look at the figures and see what's the best option - sorry my figures were a bit confusing, it was difficult getting clear details from Phoenix/Royal Sun Life, whoever they are now, over the phone.... I did ask for details in writing but will ring them again to check this will definitely be supplied.

Incidently, I have now found some info on the internet re this takeover - it all looks very dodgy to me the way this has happened and how they seem to be craftily moving things around to offload and cover their bad investments etc How can we TRUST companies like these anymore?

Thanks again
JohnG

gwarrenk

I too was a with profits policy with royal sun alliance had 5.5 years left to run was sick of all the hassle knowing that it wasn`t going to pay the mortgage off,words cant describe how you feel when you have paid INTEREST only for twenty years and you still owe them the lot!!! So i got the surrender value, then sold it through Integrity for £700 more then the surender value,paid it off the mortgage,then borrowed the remaining on a bank loan of 5.7% for life,saves all this worry.paid the rest of the mortgage off,the bank loan was unsecured,so now the house is ours,went for the bank loan as b/s charged us £250 for paying the lump sum off ( endowment money) then they wanted another £299 to transfer the remaining to a repayment.no way,well the house is ours now, and as for life insurance, we both work and our lives are covered with them, WHY WORRY. Haven`t had to take the loan over any longer either

tonyflan

I to have been sent a letter from Phoenix and London saying that they intend to increase charges etc. Is there anything at all we can do to stop these cowboys sticking it up us like this? I would also like to know if this policy is worth keeping now that they appear to do what they like passing our financial future from pillow to post!
I have a 25 year with profits plan that is set to mature in 03/2014 and I pay £94 for a target amount of £64K in 2014. The current basic bonus is £21k and has a total bonus to end 2004 of £9600. I also have another 50K on a repayment mortgage (thankfully). I have been trying to get the Finance Ombudsman to accept my claim to being mis-sold this endowment policy as we were sent down this route by an eager salesman who suggested that we may not get our mortgage offer accepted at the time if we didn't go this way(we were naive and skint). The rates of growth are now completely unrealistic and people shouldn't be sold policies that can't even pay off a dept after 25 years for such an important financial purchase!
I would be grateful for any advice on what I can do about Phoenix and the policy itself.

Thanks.

EdInvestor

Hi tonyflan,

Post the surrender value of the policy and we can have a look.

You should be able to make a misselling claim provided you received a "red letter" stating there was a high risk of shortfall not more than 3 years ago.

Guidance on making a claim here:

https://www.endowmentaction.co.uk

tonyflan

Dear EdInvestor,

Thanks for the prompt relpy and the info. I have been told that the surrender value is £17.618 as of today.
As for the endowment claim, I did receive 'Red' letter warnings in 2003 and 2005. I have also found a letter from 2000 which has a high risk warning at the foot of the letter (nothing red here). A problem I have we these letters is that nowhere do they state that any time limit is being imposed on the right to complain? As I stated, I have made a complaint to FOS since the publicity of the mis-selling and realising there actually was a time limit for a claim to be made

EdInvestor

You need to complain to whoever sold you the endowment in the first instance, not to the FOS.

As to the policy, if you surrendered it and put it in the bank @4% also paying in the premiums, you should end up with 37,270, compared with your guaranteed value of only 30,600, so that's quite a large difference..

If you're paying 6% oin the mortgage and used the money to reduce the sum owed, adding the endowment premiums to the mortgage payment, then the equivalent return would be 43,145.

So the way forward is pretty clear, unless replacement of the life cover is an issue.