Help with Endowment Shortfall

kaznelson

Hi,

We have received another letter from Friends Provident explaining we will have a shortfall on our Endowment.

We have gone down the route of trying to reclaim some money due to mis-selling but FSA have investigated and told us the only way forward would be a private prosecution against the accountant who sold us the endowment.

What I am now trying to do is decide what is the best way to deal with the shortfall.

This is the information I have received today:

Start Date: August 1994
Maturity Date: August 2019
Target Amount: £40'000

Declared bonuses £4426.26
Minimum guaranteed cash sum (inc bonuses) £23106.26

Last years guaranteed cash sum £23095.22

Current surrender value £10265.00

We currently pay £60.20 for the endowment. In addition we have a repyament mortgage of £30k which we are tied into until 2011. Interest rate is about 6.5%

Any suggestions would be gratefully received!

EdInvestor

Post the following info

Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity forecasts

Interest rate payable on mortgage

kaznelson

Sorry posted before finished typing. I have added the info required.

kaznelson

can anybody help?

EdInvestor

Still need the maturity forecasts.

kaznelson

sorry, what are the maturity forecasts?

dunstonh

They are the example illustrations of what your fund may be in future if they grow at x%. Statements carry them and you can request an update.

kaznelson

Ok, these are the figures

4% - £23'600, 5.5% - £26'900, 8% - £33'500

Target amoutn is £40k

Thank You.

EdInvestor

kaznelson wrote: »

Ok, these are the figures

4% - £23'600, 5.5% - £26'900, 8% - £33'500
Target amoutn is £40k .

If you cashed it in now and used the surrender amount to reduce the mortgage, also increasing the mortgage payment by the amount of the premiums to maturity your return would be 31,957. That's without taking any risk.

The FP fund is likely to make the mid rate at best over the period. If you have no need of the life cover, there seems little point in holding onto this one as there is no premium return available for taking the risk. Especially in current circumstances you would be better to reduce debt.