standard life windfalls £250 fixed payment ??

EdInvestor

People's_Will wrote:

Whom did they serve? Investors or IFAs?

IFAs.

Can dunstonh explain on what grounds IFAs did continue to recommend Standard Life With Profit Products between April 2001 (when stakeholders were introduced) and March 2004 (when demutualisation was announced) ?

I seem to remember the Standard WP bond was offering commission at around the 7% level at least in those days.....

But there won't have been many WP products sold after around autumn 2002 when the MVA went on (at 30% :eek: ) I imagine.

dunstonh

And yet IFAs can't have recommended them on those grounds, or they would have been up before the FSA.

Why?

Can dunstonh explain on what grounds IFAs did continue to recommend Standard Life With Profit Products between April 2001 (when stakeholders were introduced) and March 2004 (when demutualisation was announced) ?

I seem to remember the Standard WP bond was offering commission at around the 7% level at least in those days....

Actually, Standard Life were offering amongst the lowest commission payers on the bond.

The main reason would have been the no exit penalty. Although there was an initial charge, the allocation rates ate into most of it and if you gifted 2-3% into the plan you got no initial charge and no exit charge. That made it quite competitive.

Another reason was the Standard Life had, by far, the lowest reduction in yield over 10 years. They continued to appear top of the comparison charts on charges.

Additionally, their with profits fund was a unitised with profits fund rather than a conventional with profits fund and investments into it would not be affected by legacy issues. Indeed, the last SL WP bond I did in Sept 03 has averaged just over 7% p.a. net.

But there won't have been many WP products sold after around autumn 2002 when the MVA went on (at 30% :eek: ) I imagine.

As mentioned above, with it being unitised WP, legacy MVRs were not an issue for new business going in after the crash. 2003 onwards have proven to be a good time to commence a UWP investment with a limited number of better providers.

Edna_Bucket_2

EdInvestor wrote:

I wouldn't be surprised if quite a big chunk of the "recent " members weren't actually long standing members with maturing endowments, rolling some of the money over into a WP bond in order to get a windfall.

Yes - I'd go with that EdInvestor. If you bear in mind the estimate of 60,000 members maturing between the 18th Oct cut off and the proposed DM time that will give some idea also of the "churn" rate I suppose.

ReportInvestor

The most important issue for me is the consistently low overall windfall expectations that we read in the press.

I can understand Standard Life management not wanting to raise hopes, only to dash them..... again. But average windfalls (however meaningless that term is) are surely going to be above £1,000 unless there is something seriously wrong with the company.

My fear is that the City could be trying to keep expectations low, so that it can pick up £3bn shares on the cheap and benefit from a later rerating or bid approach.

One aspect of this is that it could put pressure on Standard to set the basic rate of windfall at a lower level than is necessary. Last year Standard set out a vision of itself as a "People's Plc". If it is to achieve that, I believe it should bear in mind the interests of the majority of its members.

And for the benefit of all members, there needs to be more of a "good news" story in the press. The FTSE has just broken through 5,700 - a 4 1/2 year high. Standard could be floating at just the right time .

rchddap1

I joined Standard life pension around June July 2001. And my IFA recommended it....so it goes happen. I personally decided to put some in a with profits just in case....turns out I was right.

cheggers

I'll be disappointed if I dont collect £2,000 from this windfall.

I've two policies with SL, so I hope I get at least a grand payout on each. It will make up for the shocking bonus that has been paid on one of the policies for the last 3 years.

Fingers crossed its a decent windfall.

Milarky

Original post:

bilbo wrote:

whats the opinion on this ??

Standard Life set to offer fixed payouts
LIFE insurance giant Standard Life was today reported to be set to offer all eligible policyholders a minimum windfall in a bid to get maximum support for its planned demutualisation.

The group's directors are planning to meet next month to decide what the minimum windfall payment for members will be if it lists on the London Stock Exchange.


They are understood to be considering offering a fixed payout of between £250 and £500 to all of the 2.4 million policyholders who are eligible to vote on the move and who will qualify for a payout if the flotation goes ahead. A further variable windfall will be paid on top of this based on how long people have held their policies and how big they are.

However, today, Standard Life spokesman Scott White said no decision has yet been made. "A fixed element together with a variable amount to reflect the size of the investment in the with-profits fund is one option that could be considered, but nothing will be decided until about six weeks before the proposals are put forward in May or June," he added.

Total windfalls for members are likely to average around £1000, according to a newspaper report.

It is thought likely the minimum payout will be closer to £250, rather than £500, as this would be seen to be fairer by the regulator and the courts.

Have I been missing something in all this [excellent!] discussion of SL demutulisation? I thought that all members would receive was an allocation of 'free shares'. Now we are talking about a signaway payment - which does make sense - which is a cash payment. Can anyone point me in the right direction over this one?

Manys Thanks

ReportInvestor

You were right to begin with.

Your windfall will come in the form of "free shares" although these are likely to be allocated on the basis of a fixed number of shares for the loss of your membership & voting rights and a variable number of shares based on the length and size of your investment. (Do I need to rephrase that ?)

A handful of overseas members will get cash where there are legal / regulatory problems.

All the £numbers refer to is the expected value of the shares.

The "game" going on behind the scenes is probably as follows:

Standard needs to raise £xbn in capital from the City which it will do at the flotation by selling the City shares.
The City tells Standard that no-one will buy the shares unless they are priced at x (where x = the true value of the company minus 20%).
Standard needs the City's support for the flotation to succeed so it doesn't push the valuation upwards.
As a result the City gets a higher proportion of shares than it deserves and the members get less.
Those members who sell at flotation will give the City an extra dollop of cheap shares.

I'll be in no hurry to sell my free shares and will await developments at least over the first year.

But in the meantime I'd like someone to talk up the prospects for Standard shares because otherwise the City will get more and members will get less of the overall cake :mad:

ReportInvestor

The Scotsman - More reasons to be cheerful for Standard Life investors

FTSE keeps rising on insurance speculation

RUMOURS of consolidation in the life insurance sector may take off this year boosted stocks again yesterday, as the FTSE continued its relentless upward movement.

Prudential, the industry's favourite takeover candidate, led the way, reaching a 42-month high, as the FTSE jumped another 33 points to end the first full session of the year at 5,714 points, its highest level since July 2001.

"All the insurers are in vogue at the moment because everyone expects there to be some consolidation this year," said one dealer..........."

## - There is always a chance that Standard may not make it to the market should a predator choose to pounce.

Milarky

ReportInvestor wrote:

There is always a chance that Standard may not make it to the market should a predator choose to pounce.

And in that case (harking back) the members would be asked to vote for a cash sum (or at least an element, of?) I assume?