Standard Life Reductions

Ystrad_Lad

Does anyone have information on the reductions imposed by Standard Life on their WP Bonds?

I bought a WP Std Life WP Bond in Nov 2000 for £20,000. Today it's worth just over £23,000 but there is a reduction of £4,800 if I withdraw it. I can't get any indication from Std Life as to when it is likely to be removed.

schiff

Ystrad

I had something similar when I cashed a bond with Friends Provident. It is apparently very difficult to find out when and if these deductions change. It seems to be a gradual thing over time and, when I discussed it over the phone with people at FP, they didn't know themselves! In my case, after trying to find out when the next change might be (in vain), I decided to cash in anyway - and then got more than expected in the pay-out! When I tentatively asked why, the rate of deduction had changed the day before my pay-out! How lucky can you get.

You have a large percentage reduction in your investment and I don't think it's going to disappear quickly. But at least your bond is basically showing a good profit. I hope someone like dunstonh posts here for you, but I would suggest you hang on for a time longer - unless you need the money now. This is not advice by the way, just a view!

Ystrad_Lad

It's nice to know I'm not the only one who invested in With-Losses Bonds!

I thought that the stock market had all but recovered from its collapse just after I bought, so I don't really understand why the reduction is so high. Personally I'm not convinced by this new found optimism in the markets and I'd like to get out sooner rather than later.

EdInvestor

thought that the stock market had all but recovered from its collapse just after I bought, so I don't really understand why the reduction is so high.

Unfortunately the reverse is the case, this was the worst possibly time to invest, the crash was just starting then and it got worse and worse from then on.The market didn't start to recover until April 2003.

Hence your high MVA. However the market is continuing to improving - though the index has still not recovered to its high of 6900 - it's at around 6100 now, so in time the MVA should go down.

Hopefully the demutualisation windfall will also help.How many shares are you getting?

Ystrad_Lad

369 DM shares. I've got a pension with them too.

schiff

Edinvestor

Isn't it also true that insurance companies moved out of shares (because they had suffered so much from the fall) into bonds and the like, so have missed the recovery in the Stock Market? I think they probably had to (to stay liquid) rather than them making an unwise decision.

It just shows that the supposed experts in managing your money often come a cropper!

dunstonh

It just shows that the supposed experts in managing your money often come a cropper!

The insurance companies solvency is linked in with the with profits fund (just one of a range of funds they have). When the stockmarket crash happened, it weakened their solvency and this started a spiral effect where the FSA insisted that they sold shares to reduce the risk of going insolvent. Selling of shares pushed the market down further forcing more sales of shares. Whilst the FSA did suspend some companies from having to do that and there is some debate as to how much pressure the FSA did or didnt put on certain companies, it was the solvency problems that were the driver behind the decisions to sell at a low and nothing to do with investment performance.

This is course has nothing to to with unit linked funds which remained in shares are were managed through the crash as you would expect.