Endowments: WP bonus season kicks off

EdInvestor

FP was up from 22% TB last year to 30% this year on 25 year policies.

Could be wrong about this but is it FP that quotes its TB as a percentage of the GSA only, not the GSA plus declared bonuses ( or is it the otrher way round?)

Might be worth checking that.

Supernova

EdInvestor wrote:

Could be wrong about this but is it FP that quotes its TB as a percentage of the GSA only, not the GSA plus declared bonuses ( or is it the otrher way round?)

TB is % of declared bonuses only.

They said that investment growth was 8%. How has that affected their decision to award a 30% T bonus. And what has any of this got to do with how they actually calculate shortfall projections?

dunstonh

http://nma.citywire.co.uk/News/NewsArticle.aspx?VersionID=88203&re=750&ea=94300

FP information.

Supernova

OK thanks. It's a difficult call whether to sell or not I would say. A few good years and the guaranteed bonuses mean that it would be hard to make the sale proceeds beat them.

I thought that the annual bonuses would be paltry from now on and that it would all come down to the TB. Glad I found out different.

Jockthearab

A wee update...

After asking on here yesterday what I could expect my 15 year Friends Provident With Profit to pay out next month, guess what the postie delivered?! The letter stated the maturity details as follows:

Sum assured £7475
Declared bonus £2786.26
Final Bonus £417.94

Edinvestor is therefore correct saying that the Final bonus is a percentage of declared bonus. I've calculated this final bonus as 15%.

Hope this info may be of help.

JtA

EdInvestor

Annualised return of 3% - not great, but given the size of the market crash and the comparatively short period before maturity to recover, it could have been worse.

If you add in the demutualisation shares and divis (if appropriate) it should look more respectable.

Supernova

S, I found out from FP that the TB on my 22 year policy this year would have been 42% as opposed to 30% on a 25 year policy. Last year 22 year policies were 27% as opposed to 22% on 25 year policies.

Their letter says 'your policy is a rewrite of an earlier contract and you will have the best rate of the overall term of 24 years and the new term of 22 years'.

Anyone know how the lower term thing works? This makes it a bit more of a tricky decision as to whether to get rid, since I'm an HRT and beating those growth rates with savings is pretty difficult.

dunstonh

FP endowments often allow free switching to their unit linked range.

So, whilst the WP fund is naff, they do have some quite good unit linked funds and you wouldnt pay higher rate tax on those.

Supernova

Interesting idea - I didn't know that. I'll investigate!

EdInvestor

Get some updated forecasts for maturity values. Then you'll have a better idea.