standard life

wildbill_2

I have a standard life endowment,luckily I don't need it any longer as I paid off the mortgage. I was thinking of cashing it in as theres no point continueing paying into it,I would get nearly £6000 so I can put it in two ISA's
(me and the wife).However , the talk is standard life are demutualising,(is that the correct word?), next year, is it worth hanging on for a year ? What benefits will I get from waiting? Anybody know?

rchddap1

I have a pension with Standard Life and I pay a portion of that into a with profits policy. Its only if you have a with profits element that you will be entitled to anything. THis will be very obvious as when they hold their AGM you will have received various papers asking you to vote or attend.

margaret_3

wildbill wrote:

I have a standard life endowment,luckily I don't need it any longer as I paid off the mortgage. I was thinking of cashing it in as theres no point continueing paying into it,I would get nearly £6000 so I can put it in two ISA's
(me and the wife).However , the talk is standard life are demutualising,(is that the correct word?), next year, is it worth hanging on for a year ? What benefits will I get from waiting? Anybody know?

Yes they will demutualise next year and yes you should hang on.
There are two very knowledgeable people about Standard Life on mse---one is called editor---and I'm sure they ill advise you.
Margaret

EdInvestor

Hello wildbill

How old is your policy? Does it still contain any terminal bonus do you know?

With smaller policies like yours it's probably going to be sensible to wait for the DM, as there are two parts to the bonus - a flat rate (usually 500 quid) and a variable rate (a percentage of policy value). I'd expect a minimum of 10% for the variable and it could be better - it's too early to say and depends on the stockmarket and hat Standard decided. So don't quote me, but I'd have thought 500+600 would be worth waiting for?

The kind of people who should take advice about leaving IMHO are those with big funds and old (at least 25 years) policies which still contain substantial terminal bonuses.These people could lose if they stayed on.

dunstonh

Nothing to add from what editor has said except emphasis that standard life do not tell you what your terminal bonus is. This can be quite significant on older plans.

Just read the other standard life threads and you will see repeats of us saying that long term maturing plans now are paying out surpluses at this time even though they have been getting shortfall letters in the past.

Only way to find out your terminal bonus is to ask an IFA to get it for you.

margaret_3

HaHa! dunstonh is the other one whose name I couldn't remember that is knowlegeable about Standard Life.
Margaret

wildbill_2

My policy started in 1987, and matures in 2012. The target amount is £12,600. On feb 2004 value was £5,383.70, on feb 2005 it was £5,502.70,about £117 difference, I am paying £223.68 a year, so I've lost over a hundred in a year.But thanks for your advice,all of you,I think I will hang on till next year,it sounds like it will be worth it.Thanks again. TTFN.

dunstonh

wildbill wrote:

My policy started in 1987, and matures in 2012. The target amount is £12,600. On feb 2004 value was £5,383.70, on feb 2005 it was £5,502.70,about £117 difference, I am paying £223.68 a year, so I've lost over a hundred in a year.But thanks for your advice,all of you,I think I will hang on till next year,it sounds like it will be worth it.Thanks again. TTFN.

You didnt lose £100. Your forgot to include the guaranteed sum assured which is added in from day one.

A 1987 policy has a good chance of having a pretty good terminal bonus still. You started the contributions during the stockmarket crash meaning most of your payments would have gone in at a time when the stockmarket was below the current level.

EdInvestor

Hello wildbill,

The guaranteed value which you're certain to get on maturity if you keep paying the premiums is the combination of the guaranteed sum assured and the total bonuses (which might be added to by about 1% max in years to come).

Re terminal bonuses, it's very hard to judge, I wouldn't rely on anything much in this area personally .

Looking at TB trends at SL, for 15 year maturing policies we have

2001 26%
2002 22.5%
2003 2%
2004 0%

And then for 25 year policies

2001 63%
2002 60%
2003 46%
2004 37%

I doubt there'll be anything much in an 18-year policy now.

The problem arises for someone with a larger, older policy: if there is still a 25% TB in there and the policy is worth say 20k or more, then it would be better to surrender IMHO - as the TB will almost certainly disappear and the windfall would just replace it, with the premiums being wasted money

dunstonh

I would disagree. I would expect to see the terminal bonus gradually increase again and, if anything see the annual bonus go down. That would match what has been happening with other providers on the unitised with profits contracts and conventional tends to lag behind them more or less.

I would also suggest you get the TB confirmed rather than working on 15 or 25 year example. A 20 year endowment may have less terminal bonus than an 18 year one at this time as you need to incorporate the effects of the stockmarket crash of the late 80s. Of course terminal bonuses are lower at this time as we have just come off the back of a stockmarket crash. There has been some recovery and this is slowly continuing. There is every indication from the providers with a half decent equity content that the tide is turning.

There is insufficient information to guide you any way at this stage and even then, there is still some guess work as you are are basically trying to predict future returns.

EdInvestor

DH

I do think we have to bear in mind that the old Standard management lost 80% of the company's free assets by leaving the money invested in the stockmarket too late in 2001/02.This was the money the TBs (and the mortgage promise) would have been paid from.It's gone - 8bn pounds was lost.:(:(

This disaster is the reason the company has to demutualise, to raise new capital to replace some the lost money.I really think that other than the DM bonus, not much more can be expected in future beyond guaranteed values. The money simply isn't there.What's left of the estate is required to cover solvency, it can't be spent on TBs.

The two main WP funds are both only around 35% in equities: only Pension One and the staheolder fund have 50% or more: where are the returns coming from?I think you'll find Standard Life will be almost completely out of With-profits within 5 years.