Endowments: terminal bonus rates falling

setmefree2

This is what I have
A NU endowment

Start Date May 1987 Maturity May 2012
Contribution £61.95 pm
Target £48,212 (:rotfl:)

Projection 4,5,6, % £35,200 / £36,600 / £38200

It states "We may make up a top up payment from our Mortgage Endowment Promise, providing the investment return on our free reserve is sufficient. The shortfall could be reduced by £5,912. .....It is our intention to fully offer the promise as long as the fund that you are invested in can afford to pay it. In current conditions this is likely to be the case. If that view changes we will give you three years notice.

Sufficient return was not earned on free reserves in the year 200-2002 which were poor investment years with a negative return. However, the cost of the Promise payments in those early years was very small compared with the free reserves held and we still made the Promise payments. You should not assume that we would waive the conditions in future. (This was May 2008)


What do you think I think it's waitng for the promise isn't it? We have 3 years 9 months to go.

Thanks

SMF2

EdInvestor

http://www.thisismoney.co.uk/investing/article.html?in_article_id=450957&in_page_id=166&ct=5

Bonus cuts roundup

the.weekender

What is annoying is the people who run these companies will get large bonuses for their poor performance.

dunstonh

the.weekender wrote: »

What is annoying is the people who run these companies will get large bonuses for their poor performance.

The people running the companies today are generally not the ones that are responsible for the rates you get.

EdInvestor

NU cuts payouts by 10%

Dick_here

EdInvestor wrote: »

NU cuts payouts by 10%

Interesting last couple of paragraphs in particular, eh Ed:

"With the reduced payout taken into account, a 25-year £50 a month mortgage endowment maturing at the beginning of September this year will pay £42,885 compared to £39,214 if the client had surrendered their policy a year ago.

Meanwhile a policyholder with a 15-year £200 a month pension will receive £56,038 compared to the £52,385 surrender they would have received on 1 September 2007."

dunstonh

Its not also true that they are cutting payouts by 10%. They are keeping annual bonuses as they are and have reduced terminal bonuses by an average of 8%. Plus of course, the first 3.1% special bonus is to be added to many plans in December.

Seeing as the markets dropped over 20%, I think the reduction of an average 8% is not bad.

EdInvestor

dunstonh wrote: »

Seeing as the markets dropped over 20%, I think the reduction of an average 8% is not bad.

I agree.It's in line with other life offices.

Gorgeous_George

Of course, now that the cuts have been made, many investors will think that they may as well hold on to their policies. I think there will be worse to come.

I recommend monitoring your surrender value on a monthly basis and consider cashing in a month before bonuses are announced (if you think bonuses may be slashed yet again). For Standard Life, this is July and January (interim and full results are announced in August and February respectively).

It is a lot less stressful NOT having endowments.

GG

splinter1955

EdInvestor wrote: »

We are now getting reports that insurance companies are cutting final bonus rates to reflect the market falls over the past year.This is of particular interest to anyone with an endowment that is coming up to maturity where it is possible you might get more if you surrendered now and invested the cash, rather than wait till the end - and waste remaining premiums.

Would anyone who has further info on their own policy please post it on this thread so we can get a picture of what's happening at each company.

Friends Provident cuts

Legal and General cuts

i have a 16 year endowment policy with phoenix life that matures next year and have been informed that it will not reach its expected return and no final bonus will be paid. However had i started the policy just 10 years ago a final bonus would be paid