Standard Life - Endowment

StevieJ

Hi,

I am looking to surrender a 25 year Standard Life endowment and pay off my mortgage, the question is: should I wait until the new bonus is declared on 1st of Feb or do it now? I think the the payout may be affected by the terminal bonus pay out.

Details

Type: Low cost endowment.

Value 1/2/2006 13,855.65 + Final bonus 42.15 = 13,897.80
Value now 14,866.00 + Final bonus 825.00 = 15,961.00
Start date 7th Oct 1988 Maturity 7th Oct 2013 25yrs.

Any ideas? or does it not matter?

I will be grateful for any advice.

Gorgeous_George

The last three years have seen my endowmnet value fall in February. I'm interested to see if demutualisation makes any difference.

Not holding my breath.



GG

dunstonh

August should have seen an increase GG and Feb is the important one as it will tell us more about Standard Life and the future potential of the with profits fund than any other bit of information we know to date.

StevieJ

Another question: what is the tax position for a higher rate tax payer on a surrendered endowment policy?

21castlehill

StevieJ wrote:

Another question: what is the tax position for a higher rate tax payer on a surrendered endowment policy?

I've been there last year, accountant expected me to be liable for tax on any profit's I'd made as I haddn't let the endowments (I surrendered 2) run the full 25 years. They were loosing £1000's each year and were projecting a 50% shortfall, but saying as they were still worth more than I'd paid in I decided to cut my losses & cash them in. In the end I made £1600 profit for 14 years investment so my accountant declared that & estimated a bill of 40% of £1600. He then asked for my chargable gains certicate for the endowments, which I'd never heard off. Anyhow both companies said that as my policies were more than 10 years old there was no chargable gains.

I sent these letters to the accountant & finalised my tax for this year past & it worked out £1600 profit & £0 tax bill for it.

EdInvestor

StevieJ wrote:

Hi,
Value 1/2/2006 13,855.65 + Final bonus 42.15 = 13,897.80
Value now 14,866.00 + Final bonus 825.00 = 15,961.00

Difficult one.The increase this year is almost entirely related to the one-off payment from the DM.The fund is half in equities and property which have done quite well but half in bonds which have done nothing or made a loss - and the money there all goes to cover guarantees anyway..

My gut feeling is that while the annual bonus may go up the TB may go down,reducing the overall maturity value.If so, it might be better to surrender now.

You could try contacting the endowment traders at https://www.apmm.org and see if they will make you an offer.They are usually quite switched on. If no offers forthcoming at all, I would go now.

Let us know how you go.

StevieJ

Thanks Ed, your thoughts on the high bond content of SL funds is well made with the effects of the three interest rate rises and possibly more to come.
I have submitted an enquiry as suggested and I will keep you posted.

StevieJ

I have received a reply from Foster and Cranfield, they have offered to auction my policy with a guide price of 17k - 17.5k with a range after deduction of fees of 16.5k and 16.8k. The 17k is used as a reserve price, no sale no charge and payment made 28 days after the auction.

I would be grateful for info if anybody has any experience of this process.

EdInvestor

Worth trying.SL policies are tending to pick up a 5% premium, so the quote is ballpark.

StevieJ

Thanks Ed.

One question: does the life assurance go with the policy? the form asks for the names and addresses of two separate people to verify my continued existence.

This would be kinda spooky, knowing that some unknown person will be quids in if I die. I have just been watching some old Avengers episodes and this just feels like one of the story lines.

EdInvestor

No it stays with you.

All very Agatha Christie