Would somneone look at my endowment figures please?

mae

I feel like I am asking so much of the people on this board at the moment and I feel a little guilty but I really need to get my head round some financial things once and for all and where else would I turn :A

I have an endowment with Friends Provident its says Managed 50% and With Profits 50%.

Obiously it has a high risk of shortfall and I am getting Red Alerts once a year when my statment comes. Took it out in 1992 and too late to complain.
It was a Homebuyer Plus Plan aimed at paying £26000 off my mortgage in 25 years. I know it is not going to pay the mortgage so I am kind of looking at it as a savings plan now as the amount is so small thought it best to keep it going rather than cash it. Just wanted to know if it is in dire repair really I suppose and if I should up the monthly amount I pay or just leave it.??

I pay £34.97 per mth.

Last statement (October 2006) said the following:

Cash in Value £6705.56
Life Cover minimum payable £26510.00
Amount paid in to date £5874.96

Managed 579.36 Units - 595.9p
With Profit 1004.68 - 323.8p


Obviously they are advising me to either up it or start additional savings but I was just going to leave it what do other think??

Also what are these things growing at per year as it gives me projections of what it would be worth at 4% 8% etc but I have no idea what it is growing at at the moment.

Sorry if I have gone on a little too much just trying to post enough info.

Any help would be appreciated.

Thanks

dunstonh

Also what are these things growing at per year as it gives me projections of what it would be worth at 4% 8% etc but I have no idea what it is growing at at the moment.

FP have a decent fund range and switching funds to a more appropriate spread then the with profits and balanced managed fund could offer far greater potential. Certainly at the 8% level. Left how it is, I would work at the 4% level for a realistic projection.

Obviously they are advising me to either up it or start additional savings but I was just going to leave it what do other think??

Who is they? Friends Provident dont employ any advisers and their staff are not authorised to advise you on anything. The best they can do is let you know the options they can offers. Nothing else. It is not advice.

mae

dunstonh wrote: »

FP have a decent fund range and switching funds to a more appropriate spread then the with profits and balanced managed fund could offer far greater potential. Certainly at the 8% level. Left how it is, I would work at the 4% level for a realistic projection.


Who is they? Friends Provident dont employ any advisers and their staff are not authorised to advise you on anything. The best they can do is let you know the options they can offers. Nothing else. It is not advice.

Sorry I meant they have put on the letter 'Options open to you are' I worded it wrong.
Can I ask them to switch the fund to a more appropriate spread or do I need to see a financial advisor?
Thanks for the advice.

EdInvestor

What interest rate are you paying on the mortgage?

Can you ring them up and get an updated surrender value, then we can take a look.

dunstonh

Can I ask them to switch the fund to a more appropriate spread or do I need to see a financial advisor?

They will not offer any advice on the spread. They are not allowed to. It falls under the remit of financial advice.

You can either get an IFA to do it (cannot be a tied agent) or you can do it yourself.

FP plans have low annual management charges so keeping them but amending the spread is often a good option if you accept investment risk.

mae

EdInvestor I've just posted on another thread of mine asking you to take a look at this and I didn't realise you already have so thanks.

My mortgage is a 2 year Tracker (+0.04%) Expires 31 January 2008

I will have to ring re updated surrender value tomorrow as I guess they will be closed now.

mae

Update

Todays cash value of the endowment is £7,554.57.

So does anyone have any suggestions. Should I leave it where it is and change the 'spread' or would you cash it and move it into something else?? I'm so mad I didn't complain in time but no point in worrying about it now its done.

mae

My husbands pension (well his contracted out one) is with Friends Provident and I've just noticed this is also a 50/50 spread. Looks like I need to do some learning on how best to change this??

His pension with his job is with Standard Life I might look at that too.

Also I know there is a lot of discussion re: contracting in/out but my husband contracted out in 1992 (same guy who sold us the endowment advised it) and my husband is now 45 so from what I can gather he is better off staying contracted out?? Any opinions welcome though because as you can see I am a novice at all this.

I think he has had his private company pension with Standard Life for about 10 years but I'll have to check this out. Is it ok to have a private pension while being contracted out too??

Any help appreciated.

Thanks

dunstonh

My husbands pension (well his contracted out one) is with Friends Provident and I've just noticed this is also a 50/50 spread. Looks like I need to do some learning on how best to change this??

Both Std Life and FP offer a limited range of funds which could offer better potential than as a spread rather than put into just one fund.

Also I know there is a lot of discussion re: contracting in/out but my husband contracted out in 1992 (same guy who sold us the endowment advised it) and my husband is now 45 so from what I can gather he is better off staying contracted out?? Any opinions welcome though because as you can see I am a novice at all this.

The contracting out rebates are up this year and it could look attractive again for a decent investment spread. However, the Govt has capped the rebate after age 43 which makes 45 onwards less attractive.

Contracting out and contracting in both have pros and cons. Current stats have those better off at 50% (meaning 50% are worse off) but the figures indicating the difference is not much. Most feel that if you contract in or out it is mostly cost neutral. However, the ability to get a tax free lump sum from contracting out and reduce your taxable income could be advantageous. Plus contracting out pensions can be taken between 55-75 and you can do income drawdown on it. Contracted in has no lump sum and is taken at state retirement age (65-68 depending on date of birth).

mae

dunstonh wrote: »

Both Std Life and FP offer a limited range of funds which could offer better potential than as a spread rather than put into just one fund.


Thanks so much for taking the time and for your help. I think re the contracting out we will just leave it contracted and take our chances. As for the quote above I don't understand (sorry) what you mean. Do you mean leave the pensions as they are or try and spread them?

dunstonh

The std life and FP pensions have a range of funds. Being older plans, the range will be limited but you should be able to switch to a spread of funds to suit risk profile and give improved potential for future returns over a with profits fund or a bog standard balanced managed fund. You can ask both of them to send you a funds list and switching form.

You may find the fund choice is adequate to meet your needs. Or you may find it isnt (experienced investors wouldnt but inexperienced investors would)