Update on Mortgage Endowment Plant - AMBER

JennyW_2

I wonder if there is anyone who can please advise the best thing to do.

I have a small endowment running with Prudential. This year I received my annual update and they have informed me it is classified as AMBER.

My plan matures August 2020.

They are saying that:
Prudential's view is that 6% each year is currently a reasonable assumption for the rate of long-term future investment growth. In future Plan Updates we will update you on our view of long-term future investment growth.

The rate of future investment growth needed to meet your target amount is between 6% and 8% each year.

My target amount is £46,500 and on their plan they are saying that if it continues to grow at 6%, then there will be a shortfall of £3,200.

I called Prudential yesterday and I believe went through to an international call centre and was told that "the team" will write to me in 5 days and how much more would I like to pay???? I said that I didn't know as I wanted to someone to let me know how much I need to pay extra to ensure that I don't have a shortfall. I can appreciate there is still no guarantee but I would just like some guidance. However being asked how much I want to pay doesn't fill me with confidence.

Can anyone assist with what I should do?

Thank you

opinions4u

You will have a few options:

1) Sit tight and do nothing - it's possible that Pru's better than most investment performance will resume and the matter will sort itself out.

2) Increase your premium to them.

3) Overpay your mortgage by enough to cover the shortfall over the next 11 years (a £3,200 loan over 11 years at 5% should cost around £32 a month - overpaying by this amount should do the job).

4) Build up a separate savings pot just in case.

There's probably one or two other options I've not considered there as well.

I'd do (3) and review the need for it next time I get a green / amber / red letter from Pru.

The good news - you've probably got a policy with just about the best company you could have .... based on current performance.