The Endowment Diary

More Doom and Gloom

It seems that shortfalls on endowment mortgages are likely to be worse than currently projected by life assurance companies.

The problem lies with the asset mix. Most of the major insurers have switched the majority of their holdings from equities and property, into assets with a lower rate of return.

Life insurers are now forced to publish far more detailed information about their investment strategy, and charges levied on their with profits funds.

However, these disclosures (called entitled Principles and Practices of Financial Management) do not require companies to disclose in full the asset mix of their funds. As usual, something that is "too little, too late".

In addition to disclosing their asset mix, life insurance companies are now disclosing that they are introducing additional charges to back up their guarantees.

Norwich Union will charge customers in the Norwich Union Life and Pensions with profits fund an additional 0.75%, and CIS will charge an extra 0.5%.

Ever felt like you were being screwed both ways?

Taking the above into account, it is unlikely that the so called "projection letters" dropping onto your mats over the coming months are accurate.

We, the holders of these failed endowment schemes, are just meant to sit and watch these companies try to bury their heads in the sand; and avoid telling us the truth about how bad things really are.

Pathetic!