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Finances / Finanzen » uk.finance » Standard Life; Endowment Crisis and de mutualisation.
Standard Life; Endowment Crisis and de mutualisation. [message #391884] So, 04 Juni 2006 15:47
Himself  
Hiya All.

I am in year 18 of a 19 year endowment mortgage.

Value of Endowment life cover with Standard Life is 31030.

Current actual value at 3/6/06 is 21907

Maturing values at June 2007 advised by SL are;
[at] 3.75% 23800
[at] 5.5% 24200
[at] 7.25% 24600

Value of Mortgage (with Nationwide) is currently 27604

Since realised in March I have obtained addmission of mis selling and
compensation of 3402, which I have agreed and this will be used to
reduce balance of mortgage to 24202


I know that amounts are small compared to some other unforunates but
age, ill health and need to retire, not to mention the complete
disaster SL's greed have made for my dottage make it quite critical for
me. I am alien to any form of demutualisation, where the foot soldiers
who provide the wealth, they gain a little in short term, but its to
the expense of providing for the fat cats profiteering long term. It
was traumatic for me to vote for demutualisation :O(

Thousand doller questions are what to do;
1..leave endowment as it is and hope it does not go tits down?
(Surrennder of policy sounds a no no even to an LSD novice like me)
2. convert part of morgage to repayment, capital and interest or leave
it "as is"?.
3. Is rate for endowment "very" likely to go below 3.75%?
4.Windfall from demutualisation, leave shares until endowment matures
or sell them PDQ?
5. What generally happens to shares on a demutualisation...immediate
and long term? In the twilight zone here I know, but probabilities must
have some trends recognised by those "in the know" more than I.

Any advice greatfully recieved to unfuddle an old mans thinking...Thank
you.
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391889 ] So, 04 Juni 2006 16:30
Ronald Raygun  
Himself wrote:

> Hiya All.
>
> I am in year 18 of a 19 year endowment mortgage.
>
> Value of Endowment life cover with Standard Life is 31030.
>
> Current actual value at 3/6/06 is 21907
>
> Maturing values at June 2007 advised by SL are;
> [at] 3.75% 23800
> [at] 5.5% 24200
> [at] 7.25% 24600
>
> Value of Mortgage (with Nationwide) is currently 27604

Any expected top-up from their "promise" fund?

> Since realised in March I have obtained addmission of mis selling and
> compensation of 3402, which I have agreed and this will be used to
> reduce balance of mortgage to 24202

OK, so on their medium forecast, you'd have a shortfall of £2.
I suspect you could live with that.

> I know that amounts are small compared to some other unforunates but
> age, ill health and need to retire, not to mention the complete
> disaster SL's greed have made for my dottage make it quite critical for
> me.

Critical? £400 if going to the low forecast?

> Thousand doller questions are what to do;
> 1..leave endowment as it is and hope it does not go tits down?

I would. It has only one year left to go. Were it another 10, 15, or
more years, that would be different. In fact, my 25-year endowment
matures in 12 years, and I'll need to give some serious thought soonish
to whether to cash it in, make it paid-up, or keep it going.

> (Surrennder of policy sounds a no no even to an LSD novice like me)

I don't see what how experienced a drug user you are has to do with this.
What (else) is LSD?

If you cashed it it now, for 21907, that would leave you 2295 to find
between now and next year. But you could pay the money straight off
your loan, thus saving yourself a lot of interest to pay your lender.

> 2. convert part of morgage to repayment, capital and interest or leave
> it "as is"?.

With only one year to run, there's probably little point in converting to
C&I now, but if you have savings you could make a lump sum repayment, and
(provided your lender credits this immediately) it will save you a year's
interest on what ever you pay off. That's bound to be more than you could
earn on it (especially after tax).

> 3. Is rate for endowment "very" likely to go below 3.75%?

Probably not. And isn't there some kind of anti-volatility protection
built in to endowments, so that your 21907 won't go down much if the
market goes down?

> 4.Windfall from demutualisation, leave shares until endowment matures
> or sell them PDQ?

Half and half?
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391892 ] So, 04 Juni 2006 17:01
Stickems.  
Young Ronald,
LSD = pounds, shillings and pence.


"Ronald Raygun" <no.spam [at] localhost.localdomain> wrote in message
news:O7Cgg.80778$wl.62256 [at] text.news.blueyonder.co.uk...
| Himself wrote:
|
| > Hiya All.
| >
| > I am in year 18 of a 19 year endowment mortgage.
| >
| > Value of Endowment life cover with Standard Life is 31030.
| >
| > Current actual value at 3/6/06 is 21907
| >
| > Maturing values at June 2007 advised by SL are;
| > [at] 3.75% 23800
| > [at] 5.5% 24200
| > [at] 7.25% 24600
| >
| > Value of Mortgage (with Nationwide) is currently 27604
|
| Any expected top-up from their "promise" fund?
|
| > Since realised in March I have obtained addmission of mis selling and
| > compensation of 3402, which I have agreed and this will be used to
| > reduce balance of mortgage to 24202
|
| OK, so on their medium forecast, you'd have a shortfall of £2.
| I suspect you could live with that.
|
| > I know that amounts are small compared to some other unforunates but
| > age, ill health and need to retire, not to mention the complete
| > disaster SL's greed have made for my dottage make it quite critical for
| > me.
|
| Critical? £400 if going to the low forecast?
|
| > Thousand doller questions are what to do;
| > 1..leave endowment as it is and hope it does not go tits down?
|
| I would. It has only one year left to go. Were it another 10, 15, or
| more years, that would be different. In fact, my 25-year endowment
| matures in 12 years, and I'll need to give some serious thought soonish
| to whether to cash it in, make it paid-up, or keep it going.
|
| > (Surrennder of policy sounds a no no even to an LSD novice like me)
|
| I don't see what how experienced a drug user you are has to do with this.
| What (else) is LSD?
|
| If you cashed it it now, for 21907, that would leave you 2295 to find
| between now and next year. But you could pay the money straight off
| your loan, thus saving yourself a lot of interest to pay your lender.
|
| > 2. convert part of morgage to repayment, capital and interest or leave
| > it "as is"?.
|
| With only one year to run, there's probably little point in converting to
| C&I now, but if you have savings you could make a lump sum repayment, and
| (provided your lender credits this immediately) it will save you a year's
| interest on what ever you pay off. That's bound to be more than you could
| earn on it (especially after tax).
|
| > 3. Is rate for endowment "very" likely to go below 3.75%?
|
| Probably not. And isn't there some kind of anti-volatility protection
| built in to endowments, so that your 21907 won't go down much if the
| market goes down?
|
| > 4.Windfall from demutualisation, leave shares until endowment matures
| > or sell them PDQ?
|
| Half and half?
|
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391894 ] So, 04 Juni 2006 17:00
john boyle  
In message <1149428821.938800.146950 [at] h76g2000cwa.googlegroups.com>,
Himself <andycabs [at] gmail.com> writes
>Thousand doller questions are what to do;
>1..leave endowment as it is and hope it does not go tits down?

Wait until you get your shares then surrender and reduce mortgage

>(Surrennder of policy sounds a no no even to an LSD novice like me)

NO, it is almost certainly the best thing to do (after demutualisation),
thinmk of all the interest you will save.

>2. convert part of morgage to repayment, capital and interest or leave
>it "as is"?.

Well there is only a year to go but you will only have £2295 outstanding
which you could pay off by continuing to make the same monthly payment
as you are now plus the amount saved n the endowment.

>3. Is rate for endowment "very" likely to go below 3.75%?

It isnt 'very' likely its a dead cert. It is only doing 1 - 2% now, and
dont forget that isnt 1 - 2% of the current value but a percentage of
the 'basic sum assured' plus bonuses to date.

>4.Windfall from demutualisation, leave shares until endowment matures
>or sell them PDQ?

Cant say yet, it will depend on the price and market conditions at the
time.

>5. What generally happens to shares on a demutualisation...immediate
>and long term?

There is no set pattern, some do well,others dont.


>In the twilight zone here I know, but probabilities must
>have some trends recognised by those "in the know" more than I.
>
>Any advice greatfully recieved to unfuddle an old mans thinking...Thank
>you.
>

The only snag with surrender now is the loss of the life cover of £9396.
You mention ill health. If you cancel the policy you will lose that
cover and you may not be able to get a reasonably priced replacement
life policy, if you have the need for such cover.
--
John Boyle
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391956 ] Mo, 05 Juni 2006 11:06
MM  
On Sun, 04 Jun 2006 14:30:06 GMT, Ronald Raygun
<no.spam [at] localhost.localdomain> wrote:

>I would. It has only one year left to go. Were it another 10, 15, or
>more years, that would be different. In fact, my 25-year endowment
>matures in 12 years, and I'll need to give some serious thought soonish
>to whether to cash it in, make it paid-up, or keep it going.

Take my scenario: I no longer have a mortage, but I kept the SL
endowment policy running. It has a shortfall of about £6,000. I
currently pay just under £24 a month to keep it going. It matures in
fives years' time. I have also toyed with surrendering it. What's your
recommendation?

MM
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391957 ] Mo, 05 Juni 2006 11:08
MM  
On Sun, 4 Jun 2006 16:00:23 +0100, John Boyle
<john [at] johnboyle1.demon.co.uk> wrote:

>The only snag with surrender now is the loss of the life cover of £9396.

So, remove that snag, as with me, who has no dependants, and it looks
like surrender is the best option. Agreed?

MM
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391959 ] Mo, 05 Juni 2006 11:18
missltoemissltoe  
> 5. What generally happens to shares on a demutualisation...immediate
> and long term? In the twilight zone here I know, but probabilities must
> have some trends recognised by those "in the know" more than I.
>

If someone gave you the cash amount from demutualisation would you go out
and buy SL shares ???

If yes - keep them.
If not - sell them.



Whats happens to the shares ?
If anyone really knew the answer to that......

IMO -
After the first few hours / couple of days they are unlikely to move much
(unless the whole market moves)
In the long term, they will probably grow at a moderate (but not very
exciting) rate.
(But I might be wrong).
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391963 ] Mo, 05 Juni 2006 12:57
dtren  
Selling is usually a better option than surrendering - though with only
a year to go that might not apply to you
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391965 ] Mo, 05 Juni 2006 13:47
Tim  
> "Himself" wrote
> >3. Is rate for endowment "very" likely to go below 3.75%?
>
"John Boyle" wrote
> It isnt 'very' likely its a dead cert. It is only doing 1 - 2%
> now, and dont forget that isnt 1 - 2% of the current value but
> a percentage of the 'basic sum assured' plus bonuses to date.

What about terminal bonuses?
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391966 ] Mo, 05 Juni 2006 13:54
Ronald Raygun  
MM wrote:

> On Sun, 04 Jun 2006 14:30:06 GMT, Ronald Raygun
> <no.spam [at] localhost.localdomain> wrote:
>
>>I would. It has only one year left to go. Were it another 10, 15, or
>>more years, that would be different. In fact, my 25-year endowment
>>matures in 12 years, and I'll need to give some serious thought soonish
>>to whether to cash it in, make it paid-up, or keep it going.
>
> Take my scenario: I no longer have a mortage, but I kept the SL
> endowment policy running. It has a shortfall of about £6,000. I
> currently pay just under £24 a month to keep it going. It matures in
> fives years' time. I have also toyed with surrendering it. What's your
> recommendation?

If you no longer have a mortgage, the shortfall won't bother you. I'm in
the same position, by the way. We no longer need to worry what alternative
sources of funds to identify in order to pay off the loan.

So for us it boils down simply to maximising the return from the
investment which the endowment represents. If we cash it in or make it
paid up, we lose the benefit of the "promise", but that introduces an
unwelcome unknown into the equation because that benefit is no longer
easily quantifiable, because they have "reneged" on it (but not quite).
They've pulled a fast one by saying the promise had strings attached, some
of which have become snagged. However, as thing stand, I understand this
means the promise has simply become less valuable, not completely worthless.
They will still make up a fraction of the shortfall relative to the
original target, but they won't commit themselves to how big a fraction.

That apart, we're left with an unknown growth curve, and we apply that
to the sum in the fund now, plus the remaining monthly contributions
(less the insurance element). Could we achieve better growth elsewhere?
Even if we could, would the loss of benefit from the promise cancel that
out? This is the decider between making it paid up or not, assuming we
don't surrender.

The decider whether to surrender or not is how much better growth we could
get on the surrender value (and on future premiums) but taking into account
the surrender penalty (in the form of losing out on terminal bonuses which
are conditional on keeping the policy going to the bitter end, and which
themselves may depend on whether you make it paid up or not). All these
factors are not accurately quantifiable. So we have nothing to go on[*].

It's further complicated because we might not be particularly interested
in maximising the resulting sum in 5 or 12 years' time, but we might
prefer just to spend the surrender value now.

Well, so much for the long answer.
The short one is "I don't know". :-)

--
[*] like the police after their toilets had been stolen.
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391997 ] Mo, 05 Juni 2006 23:19
john boyle  
In message <q3t7829mthasctqaure1ab90si7v2qnbmd [at] 4ax.com>, MM
<kylix_is [at] yahoo.co.uk> writes
>On Sun, 4 Jun 2006 16:00:23 +0100, John Boyle
><john [at] johnboyle1.demon.co.uk> wrote:
>
>>The only snag with surrender now is the loss of the life cover of £9396.
>
>So, remove that snag, as with me, who has no dependants, and it looks
>like surrender is the best option. Agreed?
>
Agreed.

--
John Boyle
Re: Standard Life; Endowment Crisis and de mutualisation. [message #391998 ] Mo, 05 Juni 2006 23:20
john boyle  
In message <LsCdnV9Bgo6YhxnZnZ2dnUVZ8sydnZ2d [at] bt.com>, Tim <me [at] home.uk>
writes
>> "Himself" wrote
>> >3. Is rate for endowment "very" likely to go below 3.75%?
>>
>"John Boyle" wrote
>> It isnt 'very' likely its a dead cert. It is only doing 1 - 2%
>> now, and dont forget that isnt 1 - 2% of the current value but
>> a percentage of the 'basic sum assured' plus bonuses to date.
>
>What about terminal bonuses?

SL includes pro rata terminal bonuses in the surrender value.
--
John Boyle
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