Standard Life endowment.

Poppy9

Ok just had a red letter.

Given the following information how much am I really likely to get on maturity in Oct 2010

Current value 1/2/05: £8437 Why is it less than 12 months ago?
Value 1/2/04 : £8571
Min amount payable at maturity: £10803
Target amount: £17000

What it might be worth:
@4% £10803
@5.75% £11700
@ 7.5% £12800

Notes re ilustrations:

• You are invested in with profits. The above figures make an allowance for any min benefit guarantees that may apply to your with profits investment at maturity
• The amounts showna are not guarnateed. You could get more or less
• What you get back depends on how your investment grows in future and the effect of charges and tax. The illustration makes an allowance for anticitpate dcharges

Policy been running since 1985 @ £22.42 per month.

rizla01

Hi Poppy.

Same here Standard Life seem to have reduced the amount that their policies were worth 12 Mths ago.

I couldn't get a satisfactory answer to that Either?

Riz

Poppy9

Hi Rizla

Blooming annoying. Why can't they provide an explanation. At least if they demutualise soon I will get some money towards the deficit. Wish they had done it years ago.

I had read on another thread I think that what they are telling us we will get bears little relation to what will actually happen at maturity. Can't remember in whos favour it worked though.

I have tried complaining but have been knocked back because the IFA who was part of a company no longer trades. As the policy was taken out in 1985 there is no safeguard. Shame really as I have the original letter from them showing the comparison between repayment and endowment. Endowment more expensive option but with a £17k surplus at maturity. Nothing mentioned of risks etc.

rizla01

I have just been told that the IFA wont investigate Endowment started before 1988.

Dunno if that's right.

Also if you do get a claim against them it bears no resemblance to the amount that you have pinned tour hopes on over all of these years.

Really disappointing, ain't it?

Poppy9

Yes sadly its true FSA just wash their hands of the matter pre 1988. I even wrote to my MP who passed it on and had a letter back saying sorry for my predictment but tough.:(

dunstonh

Standard Life conventional with profits plans use the surrender value as the current value to project from. This gives a rather distorted projection and value.

Conventional with profits plans were never designed to have a current value. However, the insurers were told to give projections based on the current value. Some havent been able to or have decided not to spend the millions it would cost to implement that change so they use the lower surrender value instead.

Current value 1/2/05: £8437 Why is it less than 12 months ago?

Influenced by above, the stockmarket and Standard Life solvency requirements. Its not a straight line. With a move towards increasing terminal bonuses but reducing annual bonuses, that would be expected.

Current value 1/2/05: £8437 Why is it less than 12 months ago?
Value 1/2/04 : £8571
Min amount payable at maturity: £10803
Target amount: £17000

What it might be worth:
@4% £10803
@5.75% £11700
@ 7.5% £12800

Spot the error:

Minimum amount at maturity is £10803. That will be made of the current annual bonuses acrrued and the guaranteed sum assured. How come that the 4% growth figure is exactly the same as the guaranteed minimum maturity? .... its because of the flawed projection system mentioned above.

What is your terminal bonus accrued to date as that is never included in the current value or projection either?

Compensationitis

WOW!!

<snip>
Policy been running since 1985 @ £22.42 per month.
<snip>

Let's do the sums:

£22.42 x 12 = £269.04 x £5380.80

Looks like a bargain to me!

EdInvestor

Hi Poppy,

This is a difficult one. The reason the value has gone down over the past year is because the terminal bonus has been cut and this is likely to continue.

It's important for you to try to find out what percentage of the current surrender value consists of TB. If it's more than about 30% IMHO you should consider surrendering the policy now, rather than waiting for the demutualisation bonus next year.

This is because what could happen is that though you keep paying in, your TB keeps going down, so the DM bonus will just replace the disappeared TB and the premiums would be wasted.Might as well take the money now if so. So call up and insist they tell you about the TB percentage.

If you surrender it now and put the SV of 8437 on deposit at 4.5% for the five years until maturity, paying in your premiums as well, you would get 11,993 compared with the guaranteed value at maturity of 10,803. Given the "free" life assurance and the DM bonus, that wouldn't be enough extra to suggest you should leave BUT, if the surrender value has more TB to lose, it's a different story.....

Poppy9

Editor

Thanks for your reply.

This is the extra information I got back from them today.

Current value £7988 + final bonus £449.45 = £8437 (note added to say these figures are not guaranteed. The final bounis is the amount that would have been paid if you had left with profits on 1.2.05. This bonus is designed to reflect with profits returns not already taken into account in the plan value.

Bonuses

Bonuses added to your plan
This year £40.01
Previous years £5237.53
Total £5277.54
Sum assured £5525
= min amount at maturity £10802

I have been saving into an ISA for the last 4 years as shock horror I have another endowment for £15k taken out in 93 due to finish in 2011. I am waiting for a statement from them (different company MGM or something like that - must check).

EdInvestor

Poppy9 wrote:

Current value £7988 + final bonus £449.45 = £8437

Pathetic isn't it, look at that tiny little TB all that's left on a 20 year policy, makes you want to weep

Still, it makes the position clearer: with only 449 quid to lose, you can probably say goodbye to the flat rate part of the Demutualisation bonus which should be 500 quid, but there is an extra variable rate which hopefully will amount to 15-25% of policy value on top of that. So I would suggest you consider staying for that bonus and then think about surrendering after you get the DM shares.

Is it more advantageous to save in the ISA or overpay the mortgage?.

Compensationitis

Current value does not reflect upon anything.