Endowment actual final payout vs projected

JackRS

Has anyone recently had their policy mature?

Just wondered how close your actual total payout was to your most recent yearly statement projected amounts? The one where they typically show 3 values (low, medium and high), with the low based on 4% growth or something similar.

I’m curious as I’ve used the low in my shortfall planning but I’m anticipating this could be optimistic.

I appreciate that with my Endowments maturing in 2011 nobody knows what will happen and these projections are just a guideline if the growth is 4% etc...

dunstonh

The projections use the FSA approved rates. The fund could do a lot over or a lot under those. Last year has seen many funds grow between 20-40%. Year before saw many funds lose 20-40%.

You need to consider the underlying investments of the fund and then estimate which of the projections is most likely to be the average.

balliol

Ours matures in a couple of days, we had a letter last week giving us a price at maturity but not guaranteeing it is fair to say that with the final bonus is it pretty close to what we originally wanted BUT if you take the bonus off it is actually below the low mark. Not a complee answers I know but it might help a bit!.;)

JackRS

balliol wrote: »

Ours matures in a couple of days, we had a letter last week giving us a price at maturity but not guaranteeing it is fair to say that with the final bonus is it pretty close to what we originally wanted BUT if you take the bonus off it is actually below the low mark. Not a complee answers I know but it might help a bit!.;)

Thanks, when you say close to what you wanted do you mean matching the original target or close the projected amount shown on statement (low, medium & high) and typically 10-50% less than original target?

dunstonh

JackRS, why did you thank ballio who, with respect, posting information that is meaningless?

It doesnt matter what their policy did. You dont know who its with, what version of product they are on, if they have LAPR tax relief, how its invested, how long it was for and what target growth rate they had.

You havent posted anything about your policy and balliol hasnt posted anything about theirs.

JackRS

dunstonh wrote: »

JackRS, why did you thank ballio who, with respect, posting information that is meaningless?

Yes I know you are correct but I was just trying to get a perspective on it, I realise it may be meanless and different. I'm trying to get a feel for the projection figure if the many people who's have recently matured were optimistic, I understand that has no relation to mine maturing next year. As you say in the last year there's been some positive movement and next year could as easily go back the other way...

unmissable

My Standard Life endownment matured on 1 Dec 09.

Original target was £20,000.

In Feb 2007 Predictions were:

3.75% 17,100
5.5% 17,900
7.255 18,700

in Feb 2008 predictions were:

3.75% 18,200
5.5% 18,700
7.25% 19,300

In Feb 09 predictions were:

3.75% 16,300
5.5% 16,500
7.25% 16,700

On 1 Dec 09 I got given 16, 246 inc all bonuses.

Lower than anything predicted in last 2 years.

So in 2009 when the stock market rose by over 20% my policy went down!!!!

Gutted.

TREVORCOLMAN

I bet the fat cats have had increases in salaries and pensions!

Gorgeous_George

If the policies do badly, your payout will be slashed - probably by more than you would expect as all the middle men still need to be paid. If the policy does extremely well you may not see all of the benefit as al the middle men claim their bonuses and the endowment companies keep some back as an insurance for future policies (and middle men's fees of course).

I struggle to understand why anybody still holds on to an endowment policy - but I'm not a financial adviser. If I was, my income might depend on people keeping these endowments running and my opinion could be different.

GG

dunstonh

I struggle to understand why anybody still holds on to an endowment policy - but I'm not a financial adviser. If I was, my income might depend on people keeping these endowments running and my opinion could be different.

Because there are good ones and bad ones. Most of the time though, it comes down to the investment funds that are used. Some have a good selection. Others have a poor selection. I came across one recently that had funds for every major sector and could be invested in the same way modern investments could. It even had a Latin America fund.

Some endowments havent done well because of the provider failing and ending up having to close their doors for new business and investing not for returns but for financial solvency. A lot of them did that after the dot.com crash. So, they lost money there but moved to mostly cash and fixed interest which is never going to recover the losses let alone make the target growth rate. They are always destined to fail. Others have lost money in the short term because of market events. But those short term losses can be highly beneficial if you are not maturing in the short term as you are now buying units much cheaper. Indeed, if you started a unit linked endowment in 2000 you couldnt have asked for a better start. However, you would still be getting ambers or reds on those even though they are more likely to end up with surpluses.

hansi

balliol wrote: »

Ours matures in a couple of days, we had a letter last week giving us a price at maturity but not guaranteeing it is fair to say that with the final bonus is it pretty close to what we originally wanted BUT if you take the bonus off it is actually below the low mark. Not a complee answers I know but it might help a bit!.;)

You say that your policy matures in a couple of days and that you had a letter last week giving you a maturity value but not guaranteeing it! Prudential have told me that they will write to me four weeks before maturity telling me what the final value is and asking for details of payment etc. I thought that this is normal procedure but I stand to be corrected!