Cashed in My Standard Life Endowment!!

Lorian

Dithering_Dad wrote: »

And lets not forget the "Endowment promise" that they sidestepped.

They didn't completely. They recently told me it was worth about 40% of the initially reported shortfall. So the shortfall is much bigger now, but the promise still amounts to several thousands of pounds to me, if I keep it to maturity. The illustrations they give dont seem to include this figure.

People cashing in policies presumably means a bigger share of the pot for those left to maturity.

EdInvestor

absolutebounder wrote: »

The greed of the investors saw the windfalls and caused the company to demutualise so no sympathy towards the idiots who voted for the windfall. Of course the management wanted it but that was their own greed.

Eh? You will perhaps recall that the management campaigned AGAINST demutualisation when the company was actually worth something in 2000.Unfortunately they narrowly won.

Then the idiots proceeded to punt OUR free assets on the stockmarket and lose the lot, nearly 10bn quid - all the terminal bonus money went down the drain.Incredible.

They were then FORCED to demutualise ( oh yes, they STILL didn't want to do it) by the FSA to raise capital to replace what they had lost.Otherwise the company would have been insolvent - like Equitable Life.

The incompetence was just extraordinary: right up to the standards of the shower that destroyed Marconi. Most of them are out the door now - clutching their bumper pensions paid for by our money of course - and good riddance to them. :mad:

You can blame Standard Life management for two things: they ruined the mutual movement - and they destroyed the With profits concept.

I wouldn't have thought anyone in the industry would have a good word to say for them.

Dithering_Dad

Lorian wrote: »

They didn't completely. They recently told me it was worth about 40% of the initially reported shortfall. So the shortfall is much bigger now, but the promise still amounts to several thousands of pounds to me, if I keep it to maturity. The illustrations they give dont seem to include this figure.

People cashing in policies presumably means a bigger share of the pot for those left to maturity.

I asked SL about this before surrendering and they told me that people who's endowments were close to maturity would get the lions share and that it would taper down as time went by. As my endowment was to mature in 2020 they said they couldn't guarantee that there would be anything left in the pot by then and even if there was it wouldn't amount to much.

Again, uncertainty that I can well do without. I worked out that after about 13 years of paying into this "investment" it has given me a 3% return. I'm sure that my money is better spent elsewhere without the risk of having a shortfall just before I plan on retiring.

I guess the moral of the story is that you have to look at your own circumstances before you make a decision. I looked at mine and decided to walk.

Lorian

Dithering_Dad wrote: »

I asked SL about this before surrendering and they told me that people who's endowments were close to maturity would get the lions share and that it would taper down as time went by. As my endowment was to mature in 2020 they said they couldn't guarantee that there would be anything left in the pot by then and even if there was it wouldn't amount to much.

Thats is in complete contrast to what they have told me, and also that would be a totally unfair way to use the fund. Did you get this in writing?

Dithering_Dad

I had the original endowment promise in writing and it stated that if my endowment had a shortfall, they would cover "all of it". Then I had it in writing that they would cover "some of it". I'm not waiting around for the letter that tells me the promise will cover "none of it".

Again, you may be lucky that your mortgage has a shorter time to run, made better gains in the time you had it, etc. Mine didn't and so I'll put the money someplace else.

absolutebounder

Standard life shares have done rather well over the last 3 yrs. A good investment but some things you need to be in for the long term.
Bear in mind with the endowment its covered one of the worst fall is stockmarket history and still given 3% a figure disguised by the surrender value.. Did you remove the cost of your life asurance before calculating the performance?

Dithering_Dad

Standard life shares have only been going since they demutualised last July, so where you get your 3 years from I don't know. Even taking out the life cover (which for 38k for a single guy of 27 would not have been much) it's still a crap return.

Like many people, I only have a certain amount of disposable income left after paying for bills, mortgage, etc. Do I continue to split this and put some into an endowment that gives poor returns and put the rest in an ISA that gives good returns or do I simply cut my losses and put the whole thing into an ISA that gives good returns?

If the financial institution I have my ISA with performs poorly, I can always move it - not true of my endowment. Good money after bad? No thanks.

Dithering_Dad

I'm also still waiting to find out why you said "One born every minute" to my original post, meaning (I assume) that I was an idiot?

Could you please clarify?

dunstonh

The mortgage promise is watered down if the endowment recovers. So, either way, you win.

The mortgage promise value is only paid if held until maturity. If you surrender, you give that up. The guaranteed sum assured is only paid if you hold to maturity. If you surrender, it gets reduced.

The terminal bonus and mortgage promise are not included in any projections and the projections usually understate the real position.

Obviously, some are worth surrendering, some are not. However, you need to look at the cost of what you are losing and paying in penalties. Before the alternative makes any profit, you have to make up for what you have lost.

absolutebounder

Sorry my error on the term of Standard life shares was in the wrong area of Iweb however 25% growth since july Is that bad for less than a year?
The endowment is not that old so its performance would not be expected to be that good yet as the early premiums are loaded for the charges. If you have 21 yrs to go on the mortgage that means the endowment would have taken a big chunk out of it in say 12 yrs time leaving you with a smaller mortgage and used to paying much larger premiums so you would then be in a good position to overpay a lot for the last few years thus reducing the term. As for life assurance you say you are saving money but you only have a decreasing term assurance. All that does is pay off the mortgage so if you or wife are unfortunate to die at say year 20 you get just a few grand. For a few pence more a level term is much better plus it would have been less if you still had the endowment.

"If the financial institution I have my ISA with performs poorly, I can always move it - not true of my endowment. Good money after bad? No thanks"

Anybody would think that there are no charges on changing ISA's. You can usually switch the investment of an endowment i believe. Plus are ISA's really doing well. Are the tax breaks really that good?

Only time will tell but I guess your cashing in of the endowment and throwing away the shares was probably not a great decision. If you have nearly 22 yrs to go on a mortgage and have had an endowment for about 13 yrs you are not doing too well on the financial planning front