Endowment Policies - Norwich Union grabbing orphan funds ?

dicknewson

Over the last year or so I've been told that a significant sum in 'orphan funds' is going to be re-allocated by Norwich Union. I have an endowment policy with them, linked to a mortgage, and apparently if I agree to the terms which will eventually appear, I will be in line for a 'windfall'. If I do not, it isn't clear to me whether I stand to possibly gain more at the end of the policy term or whether I automatically lose money. Is it an all-or-nothing thing, ie do a majority of policy holders have to agree before their 'cash grab' goes ahead, or is it a decision by individuals. I understand an 'independent' person called Claire Spottiswood is negotiating the deal on policy holders' behalves. It does seem to me that money contributed by policy-holders, which has built up as a surplus in the so-called 'orphan fund' should all be ours by right - it has only accumulated because NU have not needed (or chosen) to pay it out. Why should they have any of it ? Information and advice on how to respond please?
!!!!!! Newson

hedgehunter_2

Orphan assets neither belong to the policyholders nor the shareholder, it is the life companies working capital that has built up over many years, and the current generation of policyholders are unlikely to have contributed significantly to it.

If the estate were to be "distributed" policyholders would normally be entitled to 90% and the shareholders 10% but this is not what NU are proposing.

They are offering "re attribution" which means that they will offer cash and or bonuses for policyholders giving up any right to the future distribution of the estate, and a policyholder advocate is appointed to negotiate the policyholders share, which is likely to be less than 90%.

So the policyholders choice is to take what is on offer now, or reject the offer in the hope that more might be available in the future if the estate is ever distributed.

I guess the key quesation is how long has your policy to go, if it is not long by rejecting the offer you may not qualify in the future for any distribution because you may no longer have a policy.

If the policyholders or the shareholders demand too much money from each other the deal will not proceed. Both sides must agree the split of the reattribution.

dunstonh

IIRC, AMP tested this in the high court when they wanted to spend Pearl's orphan estate. The FSA didnt want them to but the High Court agreed the money belonged to AMP. Which led to the joke that AMP got access to the orphan assets which were valued almost the same as what they paid for Pearl. Effectively, they used Pearl's money to buy Pearl. Although in reality, the blew it on making some really poor purchases which ended up destroying Pearl (and sister companies).

Moy_2

I have a policy that matures in 3 years and have also had the same mail.
Mine is a savings endowment not linked to my house at all.
Should I just leave it as it is?
Would hate to lose money - I am a true Aberdonian you see.:T

EdInvestor

hedgehunter wrote: »

Orphan assets neither belong to the policyholders nor the shareholder, it is the life companies working capital that has built up over many years, and the current generation of policyholders are unlikely to have contributed significantly to it.

For reasons of inflation alone one has to doubt this.The massive expansion of WP products like endowments, personal pensions and WP bonds all took place in the last 20 years.

If the estate were to be "distributed" policyholders would normally be entitled to 90%...

....which reflects the reality.The vast majority of the money was held back from policyholders.