Legal and General (L&G) have sent me a summary of the performance of my two "with profits" (a misnomer if ever there was one) polices that I have with them.
They mature this year and, in theory, are meant to cover a £75K mortgage.
Based on the less than stellar performance to date, as outlined in the bonus statement for 2011, I estimate that the shortfall will be around £30K; ie a percentage shortfall of 40%!
This spectacularly poor performance is "odd" given what L&G say about themselves:
"You have one of the UK's leading fund management groups looking after your money.
The With Profits Fund aims to even out some of the short-term ups and downs of investing, helping you to plan for your future."
Complete and utter bollocks!
Do these people really believe their own bullshit?
Showing posts with label Legal and General. Show all posts
Showing posts with label Legal and General. Show all posts
Thursday, May 24, 2012
Wednesday, April 11, 2012
The Endowment Timebomb
Legal & General (L&G) have warned that there will be a peak in with profits (a misnomer if ever there was one) mortgage endowment maturities in 2013, with most of them showing a shortfall.
Legal & General state that (based on its figures) 86% of policyholders are in the red, and that 46,000 L&G policies will mature next year.
Given that many people have not put aside enough money to meet these shortfalls, next year will pose the risk of a severe destabilisation of the housing market.
Legal & General state that (based on its figures) 86% of policyholders are in the red, and that 46,000 L&G policies will mature next year.
Given that many people have not put aside enough money to meet these shortfalls, next year will pose the risk of a severe destabilisation of the housing market.
Tuesday, October 04, 2011
A Crock of Shite
How "nice", Legal & General (L&G) wrote to me yesterday advising me that one of my "with profits" (a misnomer if ever there was one) endowment polices that I have with them will experience a shortfall.
The policy, which was taken out in 1991, will mature next year.
Its target was £39,700.
The expected shortfall, depending on whether the investment return is between 4%-8% (fat chance in today's markets!), is expected to be between £13K and £14K.
That's a shortfall of between 32%-35%!
Given that the whole point of these rip off policies was to pay off a mortgage debt, I am less than "impressed" with the performance of this product.
The good news is that L&G make a nice little earner from management charges for "manging" this crock of shite.
They even suggest, as one possible solution for making up the shortfall, that I extend the term or top it up!!!!!!!!!!!!!
Let us not forget that the purpose of these shite products was to pay off mortgage debts, they have failed.
Therefore the products are faulty.
I am amazed that no one has yet brought a class action against the companies who "manage" these failed products.
If there are any law companies out there who want to try a class action, feel free to contact me.
The policy, which was taken out in 1991, will mature next year.
Its target was £39,700.
The expected shortfall, depending on whether the investment return is between 4%-8% (fat chance in today's markets!), is expected to be between £13K and £14K.
That's a shortfall of between 32%-35%!
Given that the whole point of these rip off policies was to pay off a mortgage debt, I am less than "impressed" with the performance of this product.
The good news is that L&G make a nice little earner from management charges for "manging" this crock of shite.
They even suggest, as one possible solution for making up the shortfall, that I extend the term or top it up!!!!!!!!!!!!!
Let us not forget that the purpose of these shite products was to pay off mortgage debts, they have failed.
Therefore the products are faulty.
I am amazed that no one has yet brought a class action against the companies who "manage" these failed products.
If there are any law companies out there who want to try a class action, feel free to contact me.
Thursday, March 17, 2011
Legal and General Increase Dividend
The FT reports that L&G are rewarding its shareholders:
"Legal and General has increased its full-year dividend by almost a quarter in spite of the life and pensions group missing profit estimates.
The UK’s fourth-biggest insurer by market value blamed the 9.6 per cent decline in IFRS operating profit to £1bn – worse than the 5 per cent fall expected by the City – on December’s cold weather, poor trading in the Netherlands and rising annuity reserves.
But Tim Breedon, chief executive, said the figures released on Thursday “demonstrate that we’ve been able to grow the business in 2010 and at the same time generate more cash with which to pay increasing dividends”.
He added: “All L&G’s businesses – risk, savings, LGIM and international – have contributed to today’s strong numbers by writing more new business at lower cost, growing assets under management and expanding distribution.”
L&G increased its dividend by 24 per cent to 4.75p a share, beating analyst estimates of 4.5p, and following the example set by Prudential last week when it boosted its pay-out by 20 per cent."
That's nice for the shareholders, let us trust that L&G's largess is also reflected in its with profits bonuses this year on its endowment policies.
"Legal and General has increased its full-year dividend by almost a quarter in spite of the life and pensions group missing profit estimates.
The UK’s fourth-biggest insurer by market value blamed the 9.6 per cent decline in IFRS operating profit to £1bn – worse than the 5 per cent fall expected by the City – on December’s cold weather, poor trading in the Netherlands and rising annuity reserves.
But Tim Breedon, chief executive, said the figures released on Thursday “demonstrate that we’ve been able to grow the business in 2010 and at the same time generate more cash with which to pay increasing dividends”.
He added: “All L&G’s businesses – risk, savings, LGIM and international – have contributed to today’s strong numbers by writing more new business at lower cost, growing assets under management and expanding distribution.”
L&G increased its dividend by 24 per cent to 4.75p a share, beating analyst estimates of 4.5p, and following the example set by Prudential last week when it boosted its pay-out by 20 per cent."
That's nice for the shareholders, let us trust that L&G's largess is also reflected in its with profits bonuses this year on its endowment policies.
Monday, March 07, 2011
L&G Endowments Above Target?
Legal & General recently announced that mortgage endowment policies maturing this year will pay out more than was originally predicted when the policies were taken out 25 years ago.
Seemingly, if L&G's projections are correct, someone who paid £50 a month into one of the policies for 25 years will receive £34,750 (£372 above the target amount).
This optimistic announcement contrasts somewhat sharply with the September client mailing carried out by L&G, in which 81% of its mortgage endowment customers received red letters.
Don't crack open the champagne, until you receive your payout.
Seemingly, if L&G's projections are correct, someone who paid £50 a month into one of the policies for 25 years will receive £34,750 (£372 above the target amount).
This optimistic announcement contrasts somewhat sharply with the September client mailing carried out by L&G, in which 81% of its mortgage endowment customers received red letters.
Don't crack open the champagne, until you receive your payout.
Thursday, January 27, 2011
A Surplus!
A Surplus!
Ian Cowie, of the Telegraph, writes about his Legal and General endowment policy:
"..my 25-year with-profits endowment matured last month and paid out 33pc more than the target value.
Since you ask, the maturity forecast was £45,000 but the actual payout was a bit above £60,000..."
How nice for him!
My L&G policies both mature next year, and are forecast to make large losses.
How can there be such a difference between his L&G policy and mine, given that the maturity date is less than two years apart?
Ian Cowie, of the Telegraph, writes about his Legal and General endowment policy:
"..my 25-year with-profits endowment matured last month and paid out 33pc more than the target value.
Since you ask, the maturity forecast was £45,000 but the actual payout was a bit above £60,000..."
How nice for him!
My L&G policies both mature next year, and are forecast to make large losses.
How can there be such a difference between his L&G policy and mine, given that the maturity date is less than two years apart?
Friday, October 02, 2009
Fit For Purpose?
Fit For Purpose?
Legal and General informed me today that the shortfall on my "with profits" endowment mortgage of £39K will range between £13K - £16K.
So much for the concept of "smoothing", allegedly one of the main components of a "with profits" policy.
Maybe they could also explain to me why they sold and "managed" a product that clearly was not fit for purpose?
Legal and General informed me today that the shortfall on my "with profits" endowment mortgage of £39K will range between £13K - £16K.
So much for the concept of "smoothing", allegedly one of the main components of a "with profits" policy.
Maybe they could also explain to me why they sold and "managed" a product that clearly was not fit for purpose?
Thursday, July 16, 2009
99% Shortfall
99% Shortfall
This Is Money reports that a staggering 99% of endowment policies will fail to pay off the mortgages which they were designed to cover.
With over 4.3M policies still in force this means that millions of people will be affected by the failure of these useless products.
The FSA and the life assurance companies that "manage" these failed products continue to hide behind the excuse that, as they are investments, the consumer knowingly accepted the risk that they might not cover the mortgage.
This excuse is not valid, as the life assurance companies told the hapless consumer that they were designed to pay off their mortgages. Why else would anyone have bought these products if they were not going to fulfil their primary function of paying off a mortgage?
The fact 99% of them will fail to do this is proof that the product was poorly designed, and continues to be atrociously "managed" (eg why do life assurance companies continue to milk the policies of commissions, when they have demonstrably failed?).
The consumer has been ripped off by the life assurance industry, and left to rot by the FSA.
This Is Money reports that a staggering 99% of endowment policies will fail to pay off the mortgages which they were designed to cover.
With over 4.3M policies still in force this means that millions of people will be affected by the failure of these useless products.
The FSA and the life assurance companies that "manage" these failed products continue to hide behind the excuse that, as they are investments, the consumer knowingly accepted the risk that they might not cover the mortgage.
This excuse is not valid, as the life assurance companies told the hapless consumer that they were designed to pay off their mortgages. Why else would anyone have bought these products if they were not going to fulfil their primary function of paying off a mortgage?
The fact 99% of them will fail to do this is proof that the product was poorly designed, and continues to be atrociously "managed" (eg why do life assurance companies continue to milk the policies of commissions, when they have demonstrably failed?).
The consumer has been ripped off by the life assurance industry, and left to rot by the FSA.
Tuesday, January 20, 2009
L&G Replaces Freshfields
Legal & General (L&G) has completed a review of its external legal advisers, and replaced Freshfields Bruckhaus Deringer with Allen & Overy.
Freshfields advised L&G in 2005, when L&G was investigated by the Financial Services Authority for the alleged mis-selling of endowment mortgages.
Freshfields advised L&G in 2005, when L&G was investigated by the Financial Services Authority for the alleged mis-selling of endowment mortgages.
Wednesday, January 07, 2009
Bonus Cuts
Bonus Cuts
The Times warns that holders of with profits funds will find that their maturity values will be cut again this year, because of poor performance.
Friends Provident will announce bonuses this week, Norwich Union next week.
Standard Life will declare at the end of this month, with Prudential and Legal & General making their announcements in February.
Many "with profits" (a contradiction in terms) policy holders are of course relying on these policies to pay off their endowment mortgages. A fine example, among many (eg PPI, credit card charges, bank charges, commissions etc), of how the City has ripped off the ordinary British citizen.
The Times warns that holders of with profits funds will find that their maturity values will be cut again this year, because of poor performance.
Friends Provident will announce bonuses this week, Norwich Union next week.
Standard Life will declare at the end of this month, with Prudential and Legal & General making their announcements in February.
Many "with profits" (a contradiction in terms) policy holders are of course relying on these policies to pay off their endowment mortgages. A fine example, among many (eg PPI, credit card charges, bank charges, commissions etc), of how the City has ripped off the ordinary British citizen.
Saturday, November 29, 2008
FSA Taken To Task
FSA Taken To Task
Legal & General are taking the FSA to task over its annuity rate tables displayed on moneymadeclear.com. L&G want the FSA to display real-time annuity quotes, up-to-date rates and make a provision for postcode annuities.
However, the FSA have told the FT that the tables are up to date and are updated almost daily.
Legal & General are taking the FSA to task over its annuity rate tables displayed on moneymadeclear.com. L&G want the FSA to display real-time annuity quotes, up-to-date rates and make a provision for postcode annuities.
However, the FSA have told the FT that the tables are up to date and are updated almost daily.
Monday, October 27, 2008
What Happened To Smoothing?
What Happened To Smoothing?
The Times reports that:
"Legal & General has become the latest insurer to cut terminal bonus rates on with profits funds. The FTSE 100 company is cutting rates by between 5 and 9 per cent in the wake of falling and turbulent stock markets.
The move means that a 25-year £50 a month mortgage endowment maturing will pay £38,565 compared to £41,293 before the reduction. A 20-year £200 a month pension maturing after this change will pay £90,999 compared to £98,511 before the change.
Mark Gregory, managing director of with profits at L&G, said the decision would affect 10,000 of the company's 800,000 policyholders. He added: “We have made the decision to reduce final bonus rates to take account of some of the negative movements in the investment markets.
'In making these changes, we are ensuring fairness between all of our customers, whether they are leaving or remaining in our with profits fund.'"
Am I alone in believing that the concept of a "with profits" (a somewhat ironic name under the circumstances) fund is that the "profits/losses" are smoothed over the period of the policy in order to minimise wild fluctuations in returns?
Surely, if these policies had been well managed by L&G, such a large reduction in one year would be unnecessary?
The Times reports that:
"Legal & General has become the latest insurer to cut terminal bonus rates on with profits funds. The FTSE 100 company is cutting rates by between 5 and 9 per cent in the wake of falling and turbulent stock markets.
The move means that a 25-year £50 a month mortgage endowment maturing will pay £38,565 compared to £41,293 before the reduction. A 20-year £200 a month pension maturing after this change will pay £90,999 compared to £98,511 before the change.
Mark Gregory, managing director of with profits at L&G, said the decision would affect 10,000 of the company's 800,000 policyholders. He added: “We have made the decision to reduce final bonus rates to take account of some of the negative movements in the investment markets.
'In making these changes, we are ensuring fairness between all of our customers, whether they are leaving or remaining in our with profits fund.'"
Am I alone in believing that the concept of a "with profits" (a somewhat ironic name under the circumstances) fund is that the "profits/losses" are smoothed over the period of the policy in order to minimise wild fluctuations in returns?
Surely, if these policies had been well managed by L&G, such a large reduction in one year would be unnecessary?
Monday, July 14, 2008
Equitable Life
Equitable Life
The long suffering, and shockingly mistreated, investors in Equitable Life may be slightly cheered by a report in today's Telegraph that says:
"Prudential, Legal & General and Swiss Re are among a pack of insurance giants circling Equitable Life, Britain's oldest mutual insurer.
Equitable has drawn up a shortlist of bidders for the remnants of the former insurance leader, which at its peak was worth £26bn and had 1.5m policyholders.
News of prospective bids for the business comes ahead of this week's publication of a damning report by Ann Abraham, the Parliamentary Ombudsman, who will criticise the Government for its failure to regulate the society properly in the lead-up to its near collapse."
The purchase, if it comes, will take some time. Therefore, whilst the investors are waiting for the outcome of that, they should mount a class action against the government for its maladministration of one of the biggest scandals to shake Britain's financial services industry.
The long suffering, and shockingly mistreated, investors in Equitable Life may be slightly cheered by a report in today's Telegraph that says:
"Prudential, Legal & General and Swiss Re are among a pack of insurance giants circling Equitable Life, Britain's oldest mutual insurer.
Equitable has drawn up a shortlist of bidders for the remnants of the former insurance leader, which at its peak was worth £26bn and had 1.5m policyholders.
News of prospective bids for the business comes ahead of this week's publication of a damning report by Ann Abraham, the Parliamentary Ombudsman, who will criticise the Government for its failure to regulate the society properly in the lead-up to its near collapse."
The purchase, if it comes, will take some time. Therefore, whilst the investors are waiting for the outcome of that, they should mount a class action against the government for its maladministration of one of the biggest scandals to shake Britain's financial services industry.
Thursday, April 10, 2008
Sunday, January 20, 2008
FSA Bends In The Wind
FSA Bends in The Wind
The Financial Services Authority (FSA), has given discounts of £4M on fines imposed on banks, building societies, mortgage firms and stockbrokers over the past year.
The firms (eg Nationwide, Capital One and Norwich Union) had been found guilty of serious rule breaches ranging from mis-selling of payment protection insurance (PPI) to failing to adequately safeguard the personal details of customers.
The discounts offered are in the region of 30%, in return for promising to co-operate and not challenging the FSA's findings at tribunal.
Which? is far from impressed, and accuses the FSA of "putting the interests of the industry over those of consumers".
The FSA has decided to bend in the wind as a result of the fight it had with Legal & General in 2005, over its endowments mis-selling case.
L&G successfully appealed against the size of the fine imposed on it.
The FSA is showing excessive weakness, it neglects the fact that were a firm to complain about the size of a fine it would receive an enormous amount of negative publicity during the tribunal.
By offering such large discounts, the FSA has let the insurance and banking industry have its cake and eat it.
The Financial Services Authority (FSA), has given discounts of £4M on fines imposed on banks, building societies, mortgage firms and stockbrokers over the past year.
The firms (eg Nationwide, Capital One and Norwich Union) had been found guilty of serious rule breaches ranging from mis-selling of payment protection insurance (PPI) to failing to adequately safeguard the personal details of customers.
The discounts offered are in the region of 30%, in return for promising to co-operate and not challenging the FSA's findings at tribunal.
Which? is far from impressed, and accuses the FSA of "putting the interests of the industry over those of consumers".
The FSA has decided to bend in the wind as a result of the fight it had with Legal & General in 2005, over its endowments mis-selling case.
L&G successfully appealed against the size of the fine imposed on it.
The FSA is showing excessive weakness, it neglects the fact that were a firm to complain about the size of a fine it would receive an enormous amount of negative publicity during the tribunal.
By offering such large discounts, the FSA has let the insurance and banking industry have its cake and eat it.
Tuesday, November 06, 2007
L&G Increase Their Charges
L&G Increase Their Charges
Recently Legal and General, my endowment provider, wrote to me to inform me that my two endowment policies that I hold with them will most likely make a loss.
Using three projected returns, the 1987 policy (target £35000) will produce the following results:
-4% shortfall £5400
-6% shortfall £2700
-8% surplus £ 300
The 1991 policy (target £39700) will produce the following shortfalls:
-4% shortfall £10200
-6% shortfall £ 7500
-8% surplus £ 4600
I received another letter from them today, informing me of the following:
1 That they have changed the rules to give them the right to use fund managers other than Legal & General Investment Management Ltd, if they believe that it is necessary.
Don't they have confidence in their own management skills?
2 They are increasing the management fees for managing my policies. Seemingly they have compared their fees to other endowment providers, and feel that an increase is necessary!
The good news is that the new fees (after a search on the back of their letter, it seems that the fees are going up by 0.06% of the value of the investment per year) are, in the opinion of L&G, "highly competitive with typical market rates".
So that's alright then!
A couple of questions that have crossed my mind:
1 Why the hell are they raising the fees, when their "management" of my policies has produced losses?
2 Why are they charging more for their "management" services, when they have said that they may in fact use other fund managers?
Given the losses that my funds are projected to "yield", an increase in charges will simply make matters worse.
These endowment providers are very relaxed about changing the rules, when it suits them. Now is the time for them to change the rules to suit the hapless millions who own these useless, badly managed, costly and underperforming products.
Underwrite them!
Recently Legal and General, my endowment provider, wrote to me to inform me that my two endowment policies that I hold with them will most likely make a loss.
Using three projected returns, the 1987 policy (target £35000) will produce the following results:
-4% shortfall £5400
-6% shortfall £2700
-8% surplus £ 300
The 1991 policy (target £39700) will produce the following shortfalls:
-4% shortfall £10200
-6% shortfall £ 7500
-8% surplus £ 4600
I received another letter from them today, informing me of the following:
1 That they have changed the rules to give them the right to use fund managers other than Legal & General Investment Management Ltd, if they believe that it is necessary.
Don't they have confidence in their own management skills?
2 They are increasing the management fees for managing my policies. Seemingly they have compared their fees to other endowment providers, and feel that an increase is necessary!
The good news is that the new fees (after a search on the back of their letter, it seems that the fees are going up by 0.06% of the value of the investment per year) are, in the opinion of L&G, "highly competitive with typical market rates".
So that's alright then!
A couple of questions that have crossed my mind:
1 Why the hell are they raising the fees, when their "management" of my policies has produced losses?
2 Why are they charging more for their "management" services, when they have said that they may in fact use other fund managers?
Given the losses that my funds are projected to "yield", an increase in charges will simply make matters worse.
These endowment providers are very relaxed about changing the rules, when it suits them. Now is the time for them to change the rules to suit the hapless millions who own these useless, badly managed, costly and underperforming products.
Underwrite them!
Friday, October 19, 2007
Repayments
Repayments
There appears to be something of a sting in the tail for some long suffering endowment holders who make a successful mis-selling claim through the Financial Ombudsman Service (FOS), and then find that in fact their endowment policy recovers to leave no shortfall.
In the event that happens, the policy holder may have to repay money to their adviser.
A county court in Wales has ordered the claimant to pay back the sum of £1689, if their endowment manages to hit its original target of £13,000 in May 2010.
In September the FOS ordered retired independent financial adviser Eifion Hughes to pay the compensation to his client. However, Hughes refused to pay stating that the ombudsman had come to the wrong decision.
In an unpleasant irony, Hughes was then taken to court by the client who was being advised by an IFA acting as a claim-chaser.
The judge has upheld the complaint, but stipulated that the money would have to be paid back to the adviser on the policy's maturity if it reached above its expected value.
Hughes is quoted in The Herald as saying:
"At last this appears to be a victory for common sense. If the client loses out and it is the adviser's fault, he should pay out, but if there is no loss and perhaps even an extra gain, why should the adviser have to offer them money? Natural justice has won the day."
Evan Owen, chairman of the IFA Defence Union, said:
"It is refreshing to see the people who administer the law of the land reaching such conclusions. Let us hope that Lord Hunt takes this view on board as part of his review."
Quite right too!
As to whether many endowment polices will actually meet their targets, is open to conjecture. I can personally state that the two polices I hold with legal & General look very unlikely to get anywhere near their target.
It is also reported that almost 90% of Standard Life mortgage endowments are still highly unlikely to meet their targets.
However, I would also note that to some extent the IFA's (unless they were proven to be negligent) should not be the target of policy holders' wrath.
These lousy products were sold in the same manner as cars, TV's and other consumer products. Their sole purpose being to pay off the mortgage.
As a result of hidden/excess charges, lousy management and misrepresentation of the prospects by the funds themselves, they are massively underperfomring.
They are not fit for purpose.
It should not be the IFA's that are targeted, but the fund managers. The only solution to this shameful scandal is for the fund mangers to underwrite their useless, badly managed, products.
There appears to be something of a sting in the tail for some long suffering endowment holders who make a successful mis-selling claim through the Financial Ombudsman Service (FOS), and then find that in fact their endowment policy recovers to leave no shortfall.
In the event that happens, the policy holder may have to repay money to their adviser.
A county court in Wales has ordered the claimant to pay back the sum of £1689, if their endowment manages to hit its original target of £13,000 in May 2010.
In September the FOS ordered retired independent financial adviser Eifion Hughes to pay the compensation to his client. However, Hughes refused to pay stating that the ombudsman had come to the wrong decision.
In an unpleasant irony, Hughes was then taken to court by the client who was being advised by an IFA acting as a claim-chaser.
The judge has upheld the complaint, but stipulated that the money would have to be paid back to the adviser on the policy's maturity if it reached above its expected value.
Hughes is quoted in The Herald as saying:
"At last this appears to be a victory for common sense. If the client loses out and it is the adviser's fault, he should pay out, but if there is no loss and perhaps even an extra gain, why should the adviser have to offer them money? Natural justice has won the day."
Evan Owen, chairman of the IFA Defence Union, said:
"It is refreshing to see the people who administer the law of the land reaching such conclusions. Let us hope that Lord Hunt takes this view on board as part of his review."
Quite right too!
As to whether many endowment polices will actually meet their targets, is open to conjecture. I can personally state that the two polices I hold with legal & General look very unlikely to get anywhere near their target.
It is also reported that almost 90% of Standard Life mortgage endowments are still highly unlikely to meet their targets.
However, I would also note that to some extent the IFA's (unless they were proven to be negligent) should not be the target of policy holders' wrath.
These lousy products were sold in the same manner as cars, TV's and other consumer products. Their sole purpose being to pay off the mortgage.
As a result of hidden/excess charges, lousy management and misrepresentation of the prospects by the funds themselves, they are massively underperfomring.
They are not fit for purpose.
It should not be the IFA's that are targeted, but the fund managers. The only solution to this shameful scandal is for the fund mangers to underwrite their useless, badly managed, products.
Monday, October 08, 2007
Useless
Useless
Much like the depressing inevitability of the return of an unloved season I received two red warning letters from my endowment provider, Legal & General (L&G), the other day. I am the "proud" owner of two endowment policies taken out with Legal & General, one in 1987 and the other in 1991.
Needless to say, neither are on target to reach their objective (ie to pay off my mortgage).
Legal & General claim, using three projected returns, that the 1987 policy (target £35000) will produce the following results:
-4% shortfall £5400
-6% shortfall £2700
-8% surplus £ 300
The 1991 policy (target £39700) will produce the following shortfalls:
-4% shortfall £10200
-6% shortfall £ 7500
-8% surplus £ 4600
Hardly a "stellar" performance is it?
The question remains though, how is it that some endowment companies have been able to manage their funds sufficiently well so as not to produce a shortfall whilst Legal & General haven't?
Much like the depressing inevitability of the return of an unloved season I received two red warning letters from my endowment provider, Legal & General (L&G), the other day. I am the "proud" owner of two endowment policies taken out with Legal & General, one in 1987 and the other in 1991.
Needless to say, neither are on target to reach their objective (ie to pay off my mortgage).
Legal & General claim, using three projected returns, that the 1987 policy (target £35000) will produce the following results:
-4% shortfall £5400
-6% shortfall £2700
-8% surplus £ 300
The 1991 policy (target £39700) will produce the following shortfalls:
-4% shortfall £10200
-6% shortfall £ 7500
-8% surplus £ 4600
Hardly a "stellar" performance is it?
The question remains though, how is it that some endowment companies have been able to manage their funds sufficiently well so as not to produce a shortfall whilst Legal & General haven't?
Tuesday, September 18, 2007
The Curate's Egg
The Curate's Egg
The Telegraph reports that around 260,000 extra mortgage endowment holders have seen their policies meet their targets in the past year.
It seems that buoyant stock market has helped some policies recover their lost ground over the past few years. However, as to whether a particular policy that had previously been deemed to fail to meet target will now hit target very much depends on a number of variables; not least the quality of the company that is managing the endowment policy.
The Telegraph notes that, eg:
"Prudential's fund has been strong. The proportion of its policies that are red has significantly reduced over that period too. In 2003, 44 per cent of its policies were flagged up as red, now the figure is 15 per cent of the remaining 201,000 policies.
To date none of the Prudential's policies has failed to pay out the full target amount."
Those with Scottish Amicable have also seen an improvement. In 2003, Scottish Amicable had 65% of its policies listed as red, this figure now stands at 10%.
However, those who hold Legal and General policies have not been so fortunate. In 2004 over 55% of its policies were expected to fail to meet their repayment value. The figure now stands at 40%.
Standard Life is even worse, as it has seen its red policies rise from 86% to 88%.
As can be seen from the above, the performance is very much dependent on the "quality" of the fund managers.
The Telegraph reports that around 260,000 extra mortgage endowment holders have seen their policies meet their targets in the past year.
It seems that buoyant stock market has helped some policies recover their lost ground over the past few years. However, as to whether a particular policy that had previously been deemed to fail to meet target will now hit target very much depends on a number of variables; not least the quality of the company that is managing the endowment policy.
The Telegraph notes that, eg:
"Prudential's fund has been strong. The proportion of its policies that are red has significantly reduced over that period too. In 2003, 44 per cent of its policies were flagged up as red, now the figure is 15 per cent of the remaining 201,000 policies.
To date none of the Prudential's policies has failed to pay out the full target amount."
Those with Scottish Amicable have also seen an improvement. In 2003, Scottish Amicable had 65% of its policies listed as red, this figure now stands at 10%.
However, those who hold Legal and General policies have not been so fortunate. In 2004 over 55% of its policies were expected to fail to meet their repayment value. The figure now stands at 40%.
Standard Life is even worse, as it has seen its red policies rise from 86% to 88%.
As can be seen from the above, the performance is very much dependent on the "quality" of the fund managers.
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."
Splendid!
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?
I wonder why L&G don't disclose their charges in this this document?
What a joke!
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."
Splendid!
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!
Subscribe to:
Posts (Atom)