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