The Endowment Diary

The Endowment Diary


The Endowment Mis-selling Debacle - one of the UK's worst financial scandals

Thursday, August 30, 2007

A Bumper Year

A Bumper Year

I received my 2006 with profits statement from my endowment provider (Legal & General) yesterday. Imagine my delight when I read the following in the covering note:

"We're pleased to be able to tell you that the investments underlying your policies have performed well during 2006 generating a return of 12% (before tax and charges) over the year."


Unfortunately, on delving deeper into the document I saw that the actual portion of that 12% allocated to me (re annual bonus rate applied to existing bonus and annual bonus rate applied to basic sum assured) was a less than staggering 2%.

The reason for this disparity?
  • Tax, fair enough, that takes the 12% down to 11% according to L&G

  • Charges, which are not disclosed

  • Smoothing, to ensure that "short term fluctuations" in the value of investments are not immediately reflected in payouts
Either the charges are astronomical or the "smoothing" is far from "smooth".

I wonder why L&G don't disclose their charges in this this document?

What a joke!

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