Standard Life endowment.

EdInvestor

Hello Lady K

The figure of 13,825 is the amount you will get on maturity in 9 years time if you keep paying the premiums. You could get more, but I wouldn't expect that much more.In addition to that there is the DM windfall, which might be around 1,500-2000.

Now if you surrendered the policy now and put the S/V of 8113 in the bank at 4.5% for 9 years and paid in the premiums as well, you should end up in 9 years time with 16,570 or so, which is not much different.

Thus IMHO the best thing to do as Dunstonh says is to remortgage to repayment now,reucing the mortgage by the compensation payment and making sure that you have a new mortgage where you can overpay without penalty. Keep the endowment to pick up the DM bonus next year, then surrender it and use all the money to reduce the mortgage, paying the endowment premiums into the mortgage as well.

Lady_K

Thankyou Editor,

I do want to do that as at least it would get paid and I wouldnt have to worry so much. But my problem is a little more complicated because I'm now on incapacity benefit through illness so I don't know how I would stand trying to get a repayment mortgage while I'm out of work.

I have only just remortgaged to reduce the interest payments, that has tied me for at least 3 - 6 years with the Halifax reward mortgage.

My being out of work is going to be long term so I don't know what is the best thing is to do. At the moment I'm getting help with the interest on the mortgage but I pay the shortfall and my endowment. I would not get help with a repayment portion of a mortgage only interest only ones and not new mortgages anyway. But after the windfall next year I am going to approach Halifax and ask what I can do.

I had thought I may need to just move house to a smaller place if the problem is so bad in 9 years time although it isnt a pleasant prospect with me being ill but if I have no choice I will have to do that. Is Halifax the best people to ask as my mortgage has always been with them?

EdInvestor

Hi Ladyk,

Given your circs the thing to do would be to stick with your current arrangements and await the DM windfall I guess. Then, if appropriate, you can just pay off chunks of the I/O mortgage - not switch to repayment.I am not sure about the benefit rules: if having money in the bank would affect payments, perhaps it would be better if you let the endowment go to maturity and then sold the house/traded down as you mention at the same time.The windfall should come in the form of shares (which will hopefully pay decent tax free dividends), so they might be worth keeping too.At least you know you won't lose any more by basically doing nothing.

rizla01

Hi All,

Finally got my statement through and I am very confused and upset by what I read.

Can anyone make more sense of it and tell me that I should NOT surrender my Standard Life policy?

Total current Value LAST year was £19,654.95

After paying £608.16 over the last
12 Mths it is now worth an astonishing £19,187.20.

Current Value is £18,378.85
plus the Final bonus. £808.35.

Bonus consists of This year £76.22
Previous years £9,882.58.
Sum assured is £10,677.00

Minimum that they can pay at maturity £20,677.80

(Target amount was £27.000)

Am I better off just to keep throwing £600.00 away till maturity on 1/1/07 or what?

When is the DM likely to happen and will I receive anything if it's after 2007?

Thanks in anticipation,

Also please look at my other post

Riz

dunstonh

Tough one here Riz.

Standard Life projections for those close to maturity have been showing shortfalls. However, as if by magic, these same policies have paid out surpluses on maturity. This suggests that Standard Life are reviewing terminal bonuses on maturity. Whether this happens to you are not is not going to be known until you get there.

DM is likely late 2006, early 2007.

EdInvestor

Hi rizla

rizla01 wrote:

Am I better off just to keep throwing £600.00 away till maturity on 1/1/07 or what? When is the DM likely to happen and will I receive anything if it's after 2007?

It is depressing I agree, but IMHO you should stay at least until the DM because you will be likely to get around 3k in bonus shares.And in the event that after the DM they did slap on an exit penalty if lots of people were wanting to leave at once, your policies will mature shortly afterwards and thus you could leave quite quickly with no penalty payable.The DM should be in June or September next year, depends on state of the stockmarket at the time.

To my mind they won't delay it till after your policy matures because they are frankly desperate to get the new capital from the flotation.But keep an eye out for DM news, it sould be pretty clear what's happening by the AGM next April.

Question is, if I were to put one of the endowments into my partners name would we both qualify fot a handout at time of DM? Is it possible to do this? They expire on 1/1/2007.

It is and you should. There is always a flat rate compensation payment for loss of membershup (usually 500 quid) plus a variable rate which is based on the amount and tenure of the policies. So this will be a very good return on investment for the little policy

rizla01

Hi Editor and thanks for your reply. :beer:

I hadn't made it too clear that the wife that i split from is not the partner mentioned.

Got meself a new one about 7 years ago.:)

We are not married but live together.

Does this make any difference?

Riz

EdInvestor

I don't think so Riz, but obviously check the exact procedure with SL.It's a similar kind of situation as if you sell the policy and the membership is transferred to the new owner.

What you need to do is add your new partner's name, as the first name on the policy, so she becomes the member,not you, though the policy is in both your names.


BTW do you know the present surrender value for the policies?

rizla01

Hi Editor

Just checked with SL and they state that any policy holder can now not claim any compensation for DM, or become a voting member inside three years from their becoming a member.

My surrender value (As of last night) is £19, 613.45.

Interestingly, had I have taken my (21 yr) policy out 3 years earlier the final attaching bonus would have been 90%. 1 year earlier and the same bonus would have been 15%.

A 19 yr policy completing today would only receive an attaching bonus of 3%.

Doesn't bode too well, does it?

Now I wonder if after answering all of that you could advise me on a final question.

My pension.

Firstly, I am a healthy person and expect to make it to my mid 80s or more therefore drawing State Pension for at least 15 years.

But -- I have not paid N.I contributions for about 5 years, now and consequently my State pension is showing only 32 qualifying years resulting in a pension of only 73% i.e. £58.11 Pw.

I could pay all of the back-pay (around £1500.00) and commence paying approx £32.00 Pm and this would increase my pension to the £80.00 Pw.

Now I have done some calcs and the amount that I would be paying to them (around £8.00 Pw) would give me a return of an extra £28.00 Pw.

If I'm doing O.K. would £28.00 make all that much difference to me, in 11 years time, probably worth about £20.00 in todays value.

(If I hit on hard times the state would make that amount up anyway, wouldn't they?)

Paying into my pension would deprive me of a total figure of around £5,500.00. from my working capital.

So 15 (yrs) x 12 x 28 = £5040.00.

Of course I may make it past 80 years but then the interest I would earn on £5,500.00 would probably see me O.K.

We have always been led to believe that paying N.I and receiving the state Pension is the norm and now, because of my circumstances, I have been given the luxury of being able to take a second look at the situation and it doesn't look good.

I am Self employed BTW

Perhaps I'm missing something?

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Can anyone pass their opinions on this conundrum for me, please.

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Thanks

Riz

EdInvestor

Hello again Riz,

Still inclined to think you should stay with the endowment - if you went now and put the S/V and the premiums in the bank for the period you'd end up about 1k ahead of the guaranteed value: but if you stay I'd expect you to get 2.5k out of the DM even with just the one membership and maybe more.But keep your eyes open for any major indications of delay past your maturity date.However, that TB will disappear almost certainly, so if you're a bird in the hand type...

Re the pension,

IIRC self employed people have a choice of either Class 11 or Class 111 NI contributions: one costs about 30 quid a month and the other about 8 quid, though the benefits are more or less identical and include the state pension.

I think this is an incentive to the self employed to rejoin.May be worth checking out - at a quarter the price, the cost could be worthwhile?