Inherited Estate and with-profit funds

[Mercedes88]

LONDON (Reuters) - "The Financial Services Authority has failed to develop clear principles to regulate the uses of surplus assets held in insurers' with-profits funds and is not protecting policyholder interests, MPs said on Thursday. "

See link for rest of article.

uk.reuters.com/article/personalFinanceNews/idUKNOA92311420080619

 

10 years ago I took out a regular savings plan with Scottish Widows in a with-profits scheme which was due to run for 20 years, with the option to encash at the 10 year anniversary. My total investments at the end of 10 years have amounted to £9,000 and Scottish Widows have sent me a letter acknowledging my withdrawal request and estimating that they will pay me £9,500 back. I make that a compound interest rate of 1% per month over 10 years! I wonder how much of my investment is now part of the "inherited estate" this article is talking about?

Edited June 19, 2008 by Mercedes88

[JonCris]

I realize it's a bit late now & this comment isn't really for you but worth saying anyway. You would have been better of investing in your local Credit Union who have the same protections as the banks & NO so called managment charges

[shywazz]

You may not get back as much as you put in at the end of any savings term, this reads on most savings plans conditions, ur returns on ur monthly investment have given you alittle extra back, you now have a lump sum to reinvest in2 a higher paying account, which in turn could/might give better returns in the long run.

[JonCris]

Yeah but £500 profit on an investment of £9K of 10 years! bloody ridiculous. Like many of these 'investments' the OP would have been far better off leaving it in the local building society

[Mercedes88]

You may not get back as much as you put in at the end of any savings term, this reads on most savings plans conditions, ur returns on ur monthly investment have given you alittle extra back, you now have a lump sum to reinvest in2 a higher paying account, which in turn could/might give better returns in the long run.

 

Whoopee! I would have got a better return if I had put the money in an interest-bearing cheque account.

 

This was supposed to be a managed fund, and I expect the fund managers received a very nice salary for managing to get me a 1% return.

 

These companies use the excuse of "smoothing" to hold back returns from investors in good years, supposedly to balance up the lean years, but as per my original post it seems this money is not always being used for that purpose, so they are effectively trading under false pretences, and the FSA does nothing about it.

 

The stock market has performed much much better than 1% over the last 10 years, so even if they had stuck a pin in the pages of the FT to pick their stocks they should have done better than that for me.

 

Also it's been over a week since the expiry of the policy and still no sign of the money in my account. I thought they were supposed to have "fast payments" now! They won't be paying me any interest for late payment, I'm sure.