Standard Life

benz

Just received the Yearly Statement for my Endowment and it makes unpleasant reading and I can feel an outraged letter to Standard Life coming on

The plan value as at 1 Feb. 2004 was £12,750. Since then I've made payments of £435, but the plan value as at 1 Feb. this year is £12,495! So despite my contributions and a bonus of £58, there was a loss for the year £690!.... some investment strategy! Meanwhile the All Share index rose 13% in the same period.

They have the cheek to notify me of a "RED ALERT: HIGH RISK OF SHORTFALL". Of course there is when the return is negative! They give projections of what I might get back but the minmum figure is 4% per year, err ... what about a lower projected return. I wish it was 4%.
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Luckily the mortgage is paid off, but once STD is demutualised I won't be handing over good money after bad! I'd do better putting it under the mattress rather than pay manangement bonuses for this "performance"

dunstonh

You need to understand how a conventional with profits plan works. Just because you paid money in to it, doesnt mean it will automatically grow.

From day one you get the guaranteed sum assured. This is usually around one third of the target amount. So in the first year you paid your £435 but it was already technically worth 1/3rd of the value.

Standard Life projections do tend to be inaccurate so you need to be careful what and how you read them. This is not really standard life's fault but the mechanism they are required to follow with projections. These types of plans were never designed to have a daily value but the projection method assumes a daily value. So, SL appear to use the surrender value to project from. This can give an artificially lower value. They also dont take any terminal bonus into account.

if you look at your guaranteed sum assured and annual bonuses already accrued, that is your guaranteed minimum payout. In a number of cases I have seen that figure higher than the 4% projected figure (which just makes a mockery of the projection system). I have also had SL endowments showing a shortfall a year or two before maturity only for them to pay out a surplus on maturity because of the above inaccuracies.

Projections this year do appear to show improvements on past years so that is also positive.

benz

Thank you for the reply Dunstonh.

The guaranteed minimum payout was increased by only the bonus of £58 in the past year. If it were to continue, for every year that I put in £435 I get a return of £58, while I wait for an unknown terminal bonus at maturity to may be make it worthwhile.

The 4% projection this year shows no improvement - it decreased by £714, unless you compare it with the previous year which was a decrease of £1000.