Aegon mortgage endowment terminal bonus

Shorty12345

Hi to all you knowledgeable people, our 25 year endowment policy with aegon (Scottish Equitable) has just matured and the terminal bonus applied. We had received a letter in August to state the projected payment would be £68217.50 subject to market fluctuations. The policy matured I believe on 14th October and we received our final statement which was £64491.46, which is some £3700 less. When we questioned this large difference over such a short time period we were sent a letter stating that the Actuarials review, which is carried out every quarter, and was last carried out on the 1st October resulted in this reduction. My question is quite simply are they telling the truth? When stock markets seem to be doing pretty well.

Any advice or comments are welcome.

Dick_here

No, they're obviously liars.

magpiecottage

Unfortunately a terminal bonus is payable at the discretion of the insurer at the time - and they can vary it at a whim (in either direction).

dunstonh

My question is quite simply are they telling the truth?

These figures are not pulled out of thin air. They are calculated on the basis of returns in that period. They even themselves out over time. Originally, people only had to be one day in to the with profits monitoring period to get the full bonus for that period. However, at the end, they would miss out on the last one as they would be one day short.

When stock markets seem to be doing pretty well.

They are not doing pretty well. Largely static at the moment with periods of volatility but not really going anywhere. The UK market fell in June are are only now getting back to June's peaks. On 1st October, the UK market was 5% down on peaks earlier in the year and you still had the US debt ceiling issues creating a drag on global markets. Emerging markets suffered a near crash (more correction levels) with a 15% drop in that period. Fixed interest securities declined in that period too although they have grown a bit since. However, that mostly came after 1st October.

Timing can be a pain with these things. Whilst modern products allow you to reduce investment risk in advance, these legacy products were created in an era where they didnt see the sorts of issues we have today and didnt cater for them.

Shorty12345

Thanks for the replies and explaining the situation, I didn't trust their explanation, and not knowing how they calculate the bonus i didnt know if they were trying to short change us when there was such a difference over the final couple of months.