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L&G Endowment Crooks
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With profit endowments had been around for many decades before that. What was newer was the low cost endowment. Previously full cost was the norm.
Just to clarify, I meant new to mortgagesL&G would almost certainly love to get rid of the with profits fund just as most other insurers have tried to. Its a mill stone for most insurers and actually forced many to close their doors as they could not afford to carry on running.
You seem to be consistently ignoring L&G's own figures for the returns on the with profit funds (see previous post) mostly in double figures while paying the investors an ave 1.1%!! It doesnt sound like much of a mill stone?The underlying fund wasnt but the end investor was largely protected at the time but it took the next decade for the underlying fund to catch only for the financial crisis to shove them back under again.
Surely you mean the other way round? the underlying fund was protected while the end investor got screwed. All of the money held back by L&G while only paying 1.1% (i.e the stock market all time high) was used to protect the fund (or more accurately L&G's profits) while final bonuses were next to nothing. By the end of 2003 the returns were back up to 14%, in 2004 12%, in 2005 19%, a decade to recover!?
Do you actually work for L&G?0 -
Are you completely overlooking the impact of the terminal bonus, which is yet to be added?
You mention the word crooks. But legislation restricts the amount of profit a life assurance company can cream off for shareholders.
You mention stock market performance, but neglect to mention that the FTSE sits below its peak at the end of 2000.
You want big returns, but forget that regulation means that c40% of a with profits fund has to be held in fixed interest securities. Or the obvious requirement not to empty the with profits fund today because other members of that fund have to be catered for tomorrow.
Current 25 year maturity values with L&G are returning over double the premiums paid once the terminal bonus is added, even after the cost of life assurance has been deducted.
Yes, endowments are returning less than the glossy brochures said they would. But as average interest rates have been significantly lower anybody with a mortgage endowment from late 1980s / early 1990s has enjoyed far cheaper mortgage rates than expected at the time of inception.
What did you do with the money saved there?0 -
23 years ago these 'with profit' endowments (a relatively new thing at the time) were sold as long, long savings plans, there was never any real suggestion that there was any risk. The predicted growth rates were very modest at that time. This endowment was supposed to pay off the mortgage after 18 years or hold on till 25 years for the 'profits'!!
Had I simply put the money in a building society I would have been better off, despite L&G making good returns for themselves.
Yes, and then the returns turned out to be worse than anyone involved (sellers and buyers) expected. This is quite well known, but it doesn't make anyone a crook.
I remember at the time advising people not to take this sort of risk on home finance, and being laughed at by people such as you, who thought that I was a fool for going for a repayment mortgage.
It was a gamble that you took, as you hoped to come out with a nice windfall. The world turned out to work ratehr differently to what you'd hoped, but that doesn't make anyone a crook.0 -
By the end of 2003 the returns were back up to 14%, in 2004 12%, in 2005 19%, a decade to recover!?
If something drops in value by 50% then it needs 100% gain to recover. The fund didnt drop 50%. That is just an example. However, your gain figures do not show enough to cover the losses that were made.You seem to be consistently ignoring L&G's own figures for the returns on the with profit funds (see previous post) mostly in double figures while paying the investors an ave 1.1%!! It doesnt sound like much of a mill stone?
You are consistently ignoring the liabilities that need to be met by the fund and the way it has to be invested.Do you actually work for L&G?
Is that how you react to anyone with more knowledge on the subject than you when they try to explain the issues?I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
They were not sold as safe. The risks were fully called out even way back then (I took mine in 92), and the growth rates were not fulfilled. People regrettably assumed that the past predicted the future despite all warnings to the contrary. Yes, we all would have been better to take a repayment mortgage or invest the money, but we didn't - we took the risks.23 years ago these 'with profit' endowments (a relatively new thing at the time) were sold as long, long savings plans, there was never any real suggestion that there was any risk. The predicted growth rates were very modest at that time. This endowment was supposed to pay off the mortgage after 18 years or hold on till 25 years for the 'profits'!!
Had I simply put the money in a building society I would have been better off, despite L&G making good returns for themselves.
I watched a Mel Smith tribute the other night, and there was a sketch about queues in a bank, and the rate on the wall was investment at 12%.
People assumed the best. They weren't rightSo many glitches, so little time...0 -
opinions4u wrote: »Are you completely overlooking the impact of the terminal bonus, which is yet to be added?
You mention the word crooks. But legislation restricts the amount of profit a life assurance company can cream off for shareholders.
[FONT="]Yes and No, yes, because they vary so much and may not be paid at all so its not my money it’s a carrot. No, because I have stated comparisons including the terminal bonus in the last few years because they have remained at 50%
[/FONT][FONT="]
[/FONT][FONT="]It is very simple and typical for endowment companies to apply as many costs to the endowment they can think of to steel the money by the back door, as crooks tend to do.[/FONT]opinions4u wrote: »You mention stock market performance, but neglect to mention that the FTSE sits below its peak at the end of 2000.
[FONT="]The stock market is currently 85% of the 1999 peak value it is also 275% higher than it was when my endowment started in 1990.
[/FONT]opinions4u wrote: »You want big returns, but forget that regulation means that c40% of a with profits fund has to be held in fixed interest securities. Or the obvious requirement not to empty the with profits fund today because other members of that fund have to be catered for tomorrow.
[FONT="]What I want is what anyone would expect, which is proportion of the very good returns that L&G’s own figures say they have made[/FONT]opinions4u wrote: »Current 25 year maturity values with L&G are returning over double the premiums paid once the terminal bonus is added, even after the cost of life assurance has been deducted.
[FONT="]I am currently loosing half of everything paid into my endowment every year![/FONT]opinions4u wrote: »Yes, endowments are returning less than the glossy brochures said they would. But as average interest rates have been significantly lower anybody with a mortgage endowment from late 1980s / early 1990s has enjoyed far cheaper mortgage rates than expected at the time of inception.
What did you do with the money saved there?
[FONT="]Ha ha ha, yeh right we were all rolling in money, you do know that interest rates in 1990 were over 15% right?[/FONT]0 -
Yes, and then the returns turned out to be worse than anyone involved (sellers and buyers) expected. This is quite well known, but it doesn't make anyone a crook.
[FONT="]As I have already said about ten times now L&G’s OWN FIGURES show returns as high as 19% a year with typically double digit returns in most years over the last 10 years alone. Whilst I don’t expect to get 19% growth 1.1% is criminal.[/FONT]I remember at the time advising people not to take this sort of risk on home finance, and being laughed at by people such as you, who thought that I was a fool for going for a repayment mortgage.
[FONT="]Again, as I have already said, mortgage endowments were being sold by building societies as long term savings plans. There was never any real suggestion of the high risks involved, I went for the higher cost ‘with profit’ (the clue is in the name) endowment to add a buffer into the projections. To suggest the MOST people laughed in the face of high risks with their mortgages is insulting. [/FONT]It was a gamble that you took, as you hoped to come out with a nice windfall. The world turned out to work ratehr differently to what you'd hoped, but that doesn't make anyone a crook.
[FONT="]No one gambled intentionally with their mortgage! We were SOLD ‘with profits’ endowments under false representation or have you forgotten about endowment misselling as defined by the courts, somewhere you often find crooks.[/FONT]0 -
If something drops in value by 50% then it needs 100% gain to recover. The fund didnt drop 50%. That is just an example. However, your gain figures do not show enough to cover the losses that were made.
[FONT="]You only ever focusing only on the falls in the market and compare the highest recorded stock market value, a very brief peak in the last 23 years. You ignoring that it is still 275% higher than when I started the endowment. [/FONT]You are consistently ignoring the liabilities that need to be met by the fund and the way it has to be invested.
[FONT="]This is pretty meaningless without figures.[/FONT]Is that how you react to anyone with more knowledge on the subject than you when they try to explain the issues?
[FONT="]No this is how I react to someone who makes vague excuses without any real substance. What have you explained? You may as well have said ‘you have lost your money because L&G had lots of expenses’ Bubbly at the share holder perhaps?[/FONT]0 -
Dave_the_Ginger_Cat wrote: »They were not sold as safe. The risks were fully called out even way back then (I took mine in 92), and the growth rates were not fulfilled. People regrettably assumed that the past predicted the future despite all warnings to the contrary. Yes, we all would have been better to take a repayment mortgage or invest the money, but we didn't - we took the risks.
I watched a Mel Smith tribute the other night, and there was a sketch about queues in a bank, and the rate on the wall was investment at 12%.
People assumed the best. They weren't right
[FONT="]As I have said previously, endowments were largely misrepresented and mis-sold by deception which is why huge numbers of people pursued claims against the endowment companies.[/FONT]
[FONT="]BTW the sketch was accurate, bank interest rate in 1990 were similar to mortgage rates, about 14-15%. My endowment projection for paying off my mortgage plus ‘windfall’ bonus was based on 8% growth, hardly a wild and risky offer as suggested by those with 20+ years of hindsight….[/FONT]0 -
[FONT="]I would prefer to draw a line under the issues of past performance it was never the reason for my original post, and its clear that people don’t read them before posting comments.[/FONT]
[FONT="]I was trying to focus on the current position, when comparing the surrender value of my endowment including final bonus from one year to the next it grows by about half the amount paid in![/FONT]
[FONT="]I am paid 1.25% ‘interest’ whilst every penny I pay in disappears (or more accurately is not accounted for). This means the pathetic rate of interest only offsets half the money I loose every year. [/FONT]
[FONT="]If I cashed it in I could put ALL of the surrender value in a savings account I would get a better interest rate plus I could add my payments every month and be about 3 times better off!!![/FONT]
[FONT="]Crooks seems quite appropriate[/FONT]0
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