L&G Endowment Crooks

dunstonh

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.

You didnt pay barely anything in during 1990. The biggest problem was the near continuous gains in the 90s followed by a massive drop at the start of the millennium which meant most of your premiums bought investments at a greater value than they are at today. Not helped by the regulator forcing companies to sell equities at the low point and buy cash and fixed interest investments at the wrong time as it preferred to have solvency protected rather than see companies go under.

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!

And it all stems back to the 90s and early 2000s which is why we have focused on that point.

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!!!

Despite the issues, the endowments have still typically beaten savings accounts. Some exceptions of course but most have. You are not getting 1.25% as you are forgetting the final bonus and the basic sum assured.

BookerTee

dunstonh wrote: »

Despite the issues, the endowments have still typically beaten savings accounts. Some exceptions of course but most have. You are not getting 1.25% as you are forgetting the final bonus and the basic sum assured.

I am trying to focus on the last year or two only, the basic sum assured and the existing bonuses increase by 1.25%. The final bonus in the last full year has gone down by just over £110 because the % went from 54 to 50.

Can you offer any thoughts on the fact that I am actually loosing at least 50% of everything I am currently paying in which is my main point of concern.

dunstonh

I am trying to focus on the last year or two only, the basic sum assured and the existing bonuses increase by 1.25%. The final bonus in the last full year has gone down by just over £110 because the % went from 54 to 50

The smoothing is not just over 1 or 2 years.

If you think of there being an underlying fund value that zig zags all over the place. Until the underlying fund shows a surplus, the bonus remains low.

Can you offer any thoughts on the fact that I am actually loosing at least 50% of everything I am currently paying in which is my main point of concern.

you are not. You are paying towards the basic sum assured and buying investments which will influence the final bonus more than it will the annual bonus. Plus, you have the cost of life assurance. The basic sum assured is added on day one but you pay for it over the term.

BookerTee

The final bonus would have to be close to 100% just to break even!!!!
So as I have said about 20 times now, I am loosing money at a rapid rate.

I now have three letter from this bunch of crooks and they have flatly refused to account for where a single penny of the monthly payments go. I am now looking at the options for starting a complaint with the Financial Ombusman Service.

missingtowindward

You have every right to be mad with these guys.

My experience with a number of endowment operators is their constant use of smoke and mirrors to confuse the issue as much as possible. After all a confused customer is likely to be a silent customer and the less you understand the less you able to complain about!

The figures coming from endowment companies are shockingly poor in spite of recent property bubbles, bond bubbles and now an equity bubble.

I have seen Aviva fund performance figures over the last 14 years average 6%+ per year and yet bonus rates have been driven down to imitate bank deposit rates at an average of 0.5% per year!

These with profits funds are policyholders money and the policyholder is suposed to receive a fair asset share of the profits on a regular basis through the annual bonus. That's now not happening and it's a fair question to ask why not.

All policyholders should be entitled to know how big a fund is, it's growth over time, the amount drawn out in charges, the profitability and the amount of the profits being passed onto the customer.

All endowment policies have an element of life insurance the cost of which has fallen substantially over the last 25 years. Do we see any companies offering a rebate on over priced insurance or is that another tidy little profit being racked up at our expense!

It's all one way traffic with endoment products right now.

GlosCity

I have a Legal & General endowment policy (taken out in 1992) which is currently projecting a shortfall of 42%! (Target amount £61k, projected amount £35k).

My 2012 bonus statement said they were planning to pay me a terminal bonus of 0% (yes you read that right). They have since told me over the phone that the terminal bonus projection is now 2% which will be worth around £200.

I know these policies have been a monumental failure in the past but surely this is beyond parody.

Does anyone know if these projections have turned out to be accurate in the past?

My worry is that because endowment policy miss selling is yesterday's story, current policy holders are being fleeced even more in the hope that no one will notice. Every year Legal and General put out gushing press releases about how well their with profits polices have performed whilst at the same time taking away the bonuses of their policy holders.

dunstonh

I know these policies have been a monumental failure in the past but surely this is beyond parody.

Actually, statistically, most endowments were successful at hitting target. In your case, you have suffered really bad timing. 1991/92 was, with hindsight, just about the worst time to start an endowment. The 90s had very little volatility. So, for nearly 10 years you had virtually no negatives. Then a massive one hit between 2000-2003. Then there was nearly 5 years of really strong growth and endowments started to get back on track when the credit crunch hit. Another massive decline. So, much of the premiums you paid early on, never got a chance to grow. Losses of the scale of the dot.com period of credit crunch are uncommon. Typically, once in a generation. However, we had two in just over 10 years. Had they occurred earlier on, you would be looking at a very different value (early drops are very good news for regular investors. Later ones are not).

Does anyone know if these projections have turned out to be accurate in the past?

Projections are just examples. Not designed to be accurate as that is impossible to tell the future.

My worry is that because endowment policy miss selling is yesterday's story, current policy holders are being fleeced even more in the hope that no one will notice.

That is illogical. Returns will be what returns will be. The insurer has little control over that.

GlosCity

dunstonh wrote: »

That is illogical. Returns will be what returns will be. The insurer has little control over that.

Not quite.

One of the factors which affects the amount they pay out in bonuses is what they themselves consider to be fair. I suspect that payments to policy holders in previous years have been too generous and people like me are being clobbered to make up for this mistake.

dunstonh

One of the factors which affects the amount they pay out in bonuses is what they themselves consider to be fair.

It has nothing to do with fairness. It has to do with the underlying performance of the assets along with the financial solvency of the fund and the smoothing.

I suspect that payments to policy holders in previous years have been too generous and people like me are being clobbered to make up for this mistake.

More to do with the regulator changing the solvency requirements (which was a good move for protecting consumer money although it hit returns and forced insurers to sell equities after drops and that has created a lag on returns for a long time)

GlosCity

dunstonh wrote: »

It has nothing to do with fairness. It has to do with the underlying performance of the assets along with the financial solvency of the fund and the smoothing.

That's not what Legal and General say. In every annual bonus statement in the "Your Valuable Policy" section they refer to the Final Bonus as being made up of "any difference between the amount we've already paid in annual bonuses and the overall amount we decide is fair to pay."

It sounds to me that they have far too much discretion in how they run these funds. Are they being run for the benefit of the shareholders or the policy holders? I suspect the former. I certainly don't think a final bonus of 2% and a shortfall of 42% is being fair to me.

P.S. Probably worth mentioning that I have a second endowment with Prudential (taken out in 1997) and it is basically OK. There is a small shortfall predicted but nothing serious. In comparison I find it hard to believe that Legal and General can be so rotten at investing my money.