Standard Life question

jazzys

Hi, I wonder if you could help me.

I have a Standard Life endowment with ten years left to run.

However, I intend emigrating at the end of this year so I will probably cash it in or sell it or whatever you do with these things.

I would also like to do some home improvements before I sell the house, would it be worth cashing the endowment in now in order to finance the work.

Current value £6708
Amount payable on death £24950
minimum amount payable at maturity £11909

Cheers

ReportInvestor

Hi jazzys,

As you know, you are eligible for a windfall later this summer, but only if you continue to hold the policy until around July - or whenever you receive your windfall shares.

My best guess is that you might reasonably hope for a £1,000 windfall on that policy [In fact no-one knows and the City analysts aren't sticking their knecks out as Standard hasn't given them the figures they need to work on to value the company - nor has Standard published their windfall scheme about how to divide up that valuation]. The newspapers are suggesting that you would might get less than £1K.

How long is the endowment period? One of the factors affecting your windfall is the length of time you have held the policy. Longer membership = bigger windfall

I suppose there is a danger that you won't get back the policy value + this year's premiums if you wait. That depends on the fund's investment performance and Standard's payout policy. Some think that payouts may fall to protect other policyholders if there is a rush to cash in post demutualisation.

But who is to say? An IFA will tell you to wait (they wouldn't want to be sued for the loss of a windfall). I personally think it is best to wait.

Only can assess the best timing for your home improvements and the cost of delay if you haven't got alternative means of financing them.

Good luck with your emigration plans.

JCL

ReportInvestor wrote:

As you know, you are eligible for a windfall later this summer, but only if you continue to hold the policy until around July - or whenever you receive your windfall shares.

Not correct according to their latest Members Update which states you will be eligible for shares as long as your policy is still in force on the date of the SGM - 31 May 2006.

ReportInvestor wrote:

My best guess is that you might reasonably hope for a £1,000 windfall on that policy [In fact no-one knows and the City analysts aren't sticking their knecks out as Standard hasn't given them the figures they need to work on to value the company - nor has Standard published their windfall scheme about how to divide up that valuation]. The newspapers are suggesting that you would might get less than £1K.

I'm pretty sure they'll have the figures in order to prepare the best estimate of what shares will be worth which will be in the proposal pack issued later this month.

However, without a crystal ball it will be impossible for them to say for certain as a lot can happen between April and the likely flotation (subject to yes vote of at least 75% of those who vote and court approval) in July. For example continued activity in the sector as seen recently between Aviva and Prudential could boost the windfall amounts. Will just need to wait and see.

ReportInvestor

Thanks for that correction.

I think Standard will pubish its 2005 annual figures as late as April 18th. That will at least give the City Scribblers something to get their teeth into.

Another variable will be the amount of capital that Standard hopes to raise from the City.

jazzys

I have had the endowment since 1991, it is for 25 years

Thanks for the replies so far.

Jazzy

ReportInvestor

That's good news.

You should hang on for your windfall and you might even be pleasantly surprised.

JCL

ReportInvestor wrote:

Thanks for that correction.

I think Standard will pubish its 2005 annual figures as late as April 18th. That will at least give the City Scribblers something to get their teeth into.

Another variable will be the amount of capital that Standard hopes to raise from the City.

Indeed. Lets hope all the variables conspire to boost the value of shares at flotation.

The financial results will be included in the proposal document and will be published on their website (https://www.standardlife.com) on April 18th.

jazzys

Thanks for your help so far.

I was just wondering what the general thought was regarding the shares, do most people think its a good idea to sell them straight away or will they be a good earner in the long term?

Jazzy

EdInvestor

....do most people think its a good idea to sell them straight away or will they be a good earner in the long term?

Most people who held previous DM (and privatisation) shares for the long term have done well, because these shares usually pay out good (tax free) dividends and also tend to be less risky in stockmarket crashes than the fad of the moment (eg tech shares last time :rolleyes: )

There's an article in one of the papers today that says around 30%of members are likely to sell, and 70% to hold.

JCL

jazzys wrote:

I was just wondering what the general thought was regarding the shares, do most people think its a good idea to sell them straight away or will they be a good earner in the long term?Jazzy

I would certainly hang onto them initially. There's almost certainly bound to be some kind of incentive to do so - would expect the option to buy additional shares at a discount. The caveat will probably be that you don't sell immediately.

We are of course assuming the (at least) 75% of those who vote will say yes. Also, there will need to be a big turnout or the courts might not approve. In essence any Standard Life policyholder who is an 'eligible member' should use their vote.