Standard life to Float Windfall Shares

Galstonian

I disagree, if the company had not been mutual I think those running it would have had more professional scrutiny and would have had to justify some of their actions. If the share price starts to fall because of investment decisions I think the decisions are reversed an awful lot more quickly.

Don't get me wrong, I am not against mutuality, I am a big fan of the Yorkshire Building Society but the difference there is that YBS seem to be a very well run company with strong fundamentals.

Lady_K: I don't know what you have but if you contact SL you may be able to get clarification. I'd probably email as they may have a lot of similar queries to deal with today.

payless

Thanx Galastonian

How can I tell if I've got a with profits policy where would it say on the papers I have? All I know is its a 25 year endowment mc 80 whatever that is or is it something else I should look for on statements ect?

Almost certain you will find that you plan is with profits -
mc80 was a term used to describe a mtg endowment , that relied on bonuses 80% (annual only) of that which were being paid at time of outset.
BUT
If in doubt- call them

wadewade

Some time back when Stakeholder Pensions were the flavour of the month, a lot of people took out one with the minimum £25 investment because this acquired you membership of Standard Life. Does anyone have any views on whether I should increase my holding to (say) £105 (like the old building society rules) or is a member a member whatever the size of their policy?

Pal

The only way that a stakeholder pension would qualify is if you invest it in the with-profits fund, which you cannot do for most stakeholders because they cannot guarantee that the charges are less than 1% and you cannot surrender without penalty.

So most people with Stakeholders are unlikely to benefit from the demutualisation.

Assuming you still qualify, any additional amount you save now to ensure you are over the minimum would be entirely guesswork, and given that SL are trying to raise cash (not give away free shares) they may set the limit quite high.

I disagree, if the company had not been mutual I think those running it would have had more professional scrutiny and would have had to justify some of their actions. If the share price starts to fall because of investment decisions I think the decisions are reversed an awful lot more quickly.

A big assumption if the board is convinced that it is correct. I agree that a market listing should mean more financial transparency, but it does not guarantee it, in particular when strange vehicles like with-profits funds are involved.

Galstonian

The only way that a stakeholder pension would qualify is if you invest it in the with-profits fund, which you cannot do for most stakeholders because they cannot guarantee that the charges are less than 1% and you cannot surrender without penalty.  

So most people with Stakeholders are unlikely to benefit from the demutualisation.

Assuming you still qualify, any additional amount you save now to ensure you are over the minimum would be entirely guesswork, and given that SL are trying to raise cash (not give away free shares) they may set the limit quite high.


A big assumption if the board is convinced that it is correct.  I agree that a market listing should mean more financial transparency, but it does not guarantee it, in particular when strange vehicles like with-profits funds are involved.

But the key would be a share price rapidly heading South. Your coats on a shoogly peg if you can't keep shareholders happy but "members"? Who actually listens to "members"?

Pal

I don't understand that last comment (probably because half of it is in a foreign language ;D).

My point is that the share price is more likely to be driven both up and down by sentiment than fundamentals because few people outside of the company would be able to understand what is happening in the with-profits fund. In the end the board of any company is going to do whatever they can to increase their own remuneration and career prospects. The issue of ownership is not that relevant, except that for a mutual company you do not need to pay out cash to shareholders. You can only hope that the directors remuneration is aligned with the shareholders or policyholders interests.

It is similar to the big privatisations in the 1980s and 90s. In the end the companies involved became substantially more efficient, however most of this was achieved in the run up to privatisation, rather than afterwards.

Having thought about my earlier response some more, I have changed my mind slightly. I reckon the SL demutualisation payout will be worth somewhere between £1000 and £2000. This is no-where near the values that were paid out during 1990s demutualisations, but is still a reasonable payment. I would also guess that the payout will be entirely in Standard Life shares (rather than cash), and will be loosely based on the value of peoples with-profits holdings (i.e. the larger the policy, the larger the payout).

However, I reckon the payout will be based on the historical value of people's policies as at 31 March 2004 to avoid people putting loads of money in now to boost their ultimate payment.

payless

My guess is it will be a flat sum per w/p member, regardless to policy size or number of policies
PLUS
a variable amount based on amount invested in w/p products (as PAL suggests)

But remember this will be reflected in the sums invested no longer having as much call on the future profits.

Based on those thoughts - the policy I purchased 3 yrs ago had a small with profits element, but mainly unit linked.

Shawe_Deal

This may clarify the position above. This is a link to what was discussed today on BBC2 Working Lunch re Standard Life Float and windfall share.

http://news.bbc.co.uk/1/hi/programmes/working_lunch/3605087.stm

It specifically answers questions on endowment policies maturing before 2006 and how the holders could still benefit with further investment.

Hope it helps.

payless

LEO
obvious too early for the mechanics to be published - suppose possible they will offer  chance to roll over the investment in a bond to carry on the qualification.

todays announcement from bbc site

that people whose policies mature can continue their membership of the society by rolling over some or all of the money into a "with-profits bond

Milarky

Well done Payless - slap on the back!

Now, would you expect the windfall benefits to be 'proportional' (in some sense - I don't mean 'exactly' proportional) to the amount reinvested (as seems suggested by the "some or all" quote from the BBC)?

Do you imagine the reinvestment period is limited only to the qualifying deadline - rather than for a fixed time as with a conventional investment product (eg 5 years)?