All that I can see in (yesterdays) telegraph is http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/27/cnres127.xml

Which means nothing to me - can an expert please help ?

Plus what will happen to this money in 5 years time (when my 40k worth of policies matures) will they add to the annual bonus ?

Will Pigs Fly ?

Hold your horses!  If contributors to this message board still have their Phoenix endowment policies, and if today's (28 October 2007) Sunday Telegraph Money supplement (page M4) is correct, then you should NOT cash in your policy.  Emma Simon reports that a 25 year £50 a month Phoenix policy maturing this year will pay out - wait for it - "a staggering £350,244 - equivalent to a return of more than 20% a year".  This is nothing to do with investment growth, but is all to do with the fact that people having jumped ship in the past few years, have left a relatively small number of policy holders to share in the terminal bonus pot - a pot which is shared by Resolution. £301,976 of the above figure is terminal bonus.

 So, if Resolution has until recently been cagey about releasing information on Phoenix policy terminal bonuses or have said that terminal bonuses have been slashed, one has to ask why?  Surely Directors were in a position to calculate the pot divided by the number of remaining policy holders?  

I sold my policy (which commenced in 1987) a couple of years ago having received  two red warnings informing me of a projected £11,000 shortfall in the payout of my £31,500 mortgage and advising me to do something about it. I couldn't gamble on being able to repay my mortgage, so I paid the exit penalty and used the derisory amount given to transfer into a repayment mortgage.  I feel conned, when all along experts in the company would have known - or at least should have known - what was happening and were keeping the information to themselves.   

I took out my R&SA endowment in 1990 to cover a 25k mortgage. My December 2006 Bomus notice (which arrived during September) has quoted the following:

Bonus on Sum Assured of £8250 = 0.1% = £8.25

Bonus on Existng bonuses of 3338.30 = 0.1% = 3.34

Total Bonuses added = £11.59

Estimated Termal Bonus = 22%

By my calculations, I will be lucky to realise £13,000 upon maturity. Fortunately I no longer have that Mortgage! I didn't make a claim as I accepted that the returns were not guranteed, but I do think the current adminitratrors of my policy are at best, inept/incomptetent. I don't however think they are "at best".

I pay about £34 monthly and when I requested a cash-in valuation about 2 years ago, (after 15 years of paying in) I was quoted in the region of £6000, approximately what I had paid in at the time.

Have paid in £40.26 per month for 20 years to cover a £15,000 loan.   Basic benefit is £7848 - Projected bonus was £15,291 plus terminal bonus of £394. giving projected benefits of £27081.  However the reality is that Annual bonus dropped in 2001 to £169.74 then

2002 - £67.81

2003 - £34.07

2004 - £34.16

2005 - £34.24

2006 -£34.33          making TOTAL ANNUAL BONUSES OF £5918.27.

TERMINAL BONUS is £2615.59   ...   33.33% of sum assured making a final total of £16381.86.

Hope this helps.

Cheers Freedom - I hope a lot more Phoenix Policyholders share their info as certain patterns are becoming apparent..

 "Annual bonuses for the fast few years have been in the region of £30.  Bonuses for 20 years £5900 - and the terminal bonus is £2600"

All of my annual bonuses with Phoenix have been £30 and a few pence and if yours are the same there is something clearly wrong as they should be a % of our investment of the pooled or underlying fund.Also my policy is for 25 years starting in 1983 so I will have more money locked in - so how can our annual bonuses be the same.  If the fund is being properly managed it should br growing or changing so the annual bonus amount ( not rate) cannot be fixed - yet this appears to be the case. I would argue that this proves the annual bonus is a token sum to stop policyholders cashing in the policy yet its supposed to be related to the perfomance of the underlying fund.

 

Can you please clarify for us all the following

The exact amount of annual bonus paid under Phoenix - I will do the same when you reply

The exact % of the terminal bonus paid to you and was this % worked out on your assured sum or the total of all your bonuses plus the assured sum.?

By the way I think you have a potential case for negligence against your IFA and or Phoenix / Original company  in the sum of £9,000 as you have lost money you expected to be paid when you signed the policy. If you had to find that extra £9,000 to pay off your mortgage your case should be strong. You can claim £5000 in the small claims court by yourself.

 

I have a 20 year policy paying £40 month  taken out in 1987 and which was supposed to pay about £27,000 due out this year.   Annual bonuses for the fast few years have been in the region of £30.  Bonuses for 20 years £5900 - and the terminal bonus is £2600 making a shortfall of £9000.  Hope this helps.

"But it is worth noting that (subject to current stock market gyrations) since last year a number of the stronger life companies have been increasing terminal bonuses again, largely on the back of strong market performance since 2003.

Interesting Nic but exactly how many "zombie" funds like Phonex does this apply to? I would like to see a list. Your figure about commissions and charges on our policies of around £450 per annum is going to amaze policyholders with Phoenix like myself - its what I have long suspected and no wonder they dont want to reveal it. A  charge of £450 OUT of the policy per annum and all they can do is add a pathetic £30 back in. Thats a net loss of £420 in my book as I dont believe the policies are being managed properly nor invested properly - they are just being run down. Meanwhile OUR money is going somewhere. God what a dreadful investment this is turning out to be!

I wouldn't necessarily disagree with the surrender analysis - the old RSA with-profits fuinds were never strong performers anyway. But it is worth noting that (subject to current stock market gyrations) since last year a number of the stronger life companies have been increasing terminal bonuses again, largely on the back of strong market performance since 2003.

That has even been the case with Standard Life, which was widely regarded as a basket case in terms of its WP funds.

Going back to annual bonuses, my own fund (ex- ScotAm, now Prudential) has been attaching about 1.2% a year for the best part of about 5-6 years, probably longer, despite strong stock market growth since then. However, all WP funds have to base their final payouts on underlying stock market performance, minus charges, so in theory maturity values ought to reflect that. Am I being optimistic? Dunno, hope not....

Have a look at what Phoenix have said in the previous two or three years' statments in terms of growth of their overall WP fund. In my case, my annual statement for 2006, received just last week, said my WP fund grew by about 10.8% in 2006. There is clearly a big mismatch between the annual bonus and the WP fund growth so, barring the effect of "smoothing" in the value of the fund, the terminal bonus should reflect that fact.

In terms of finding out what a company takes out in charges, you should be able to find out what the reduction in yield is(RIY). The RIY is expressed as a percentage of the value of your fund each year. So, for example, an RIY of 1.5% means that if the value of your fund is £30k, the company is taking £450 of that in charges each year. So a fund has to grow by 7.5% a year for you to get 6%, if that makes sense.

 

---

Editor, moneysupermarket.com

No dont reckon - its an absolute certainty that the current terminal bonus rate on 25 year endowments like mine is 34% with this Resolution / Phoenix company - I have the information in black and white from Phoenix. And it doesnt end  there as they usually slash the bonus rate three times a year so expect another slash in September. And according to Phoenix they work out your terminal bonus by multiplying the terrminal bonus rate in force at the time by the amount of the assured sum in your policy ie the life insurance element. In my case its currently just £15,750 x 34% = £5355.

 As they keep on reducing these bonus rates three times a year you can see that your policy is worth less and less and less.

Critically when you are about to enter your final year ( as I will be in December) it may actually be better to surrender for the surrender value than let it run and see three more bonus reductions.

 Yes its pants and meanhwile Resolution shareholders are benefiting from our pooled fund money - we sure as hell are not!

So you reckon that the terminal bonus will be 34% of the guaranteed payment ?

As it stands - I have paid out £16k over the last 20 years and I believe that my surrender value is around £20k - that is an appalling result of £40k worth of With Profits policies

What can we do? Well I have complained to the Ombudsman about this company not releasing information. My complaint was returned as the investigator  claimed he could not investigate any further as my complaint seemed to be about "the company's commercial judgement". It was not - it was a request for information so I have returned the complaint form and demanded it be re-examined. Dont hold your breath though about complaints to the FSA

 What else can we do? Well you can cash in your policy and given that the terminal bonus rate is only 34% and the annual bonus is only £30 it is clear your money is now in a very poor investment. Ask yourself this - is it worth waiting for that terminal bonus now at this rate - and it is very likely they will keep reducing it and may even withdraw it.I have been informed my policy has a surrender value of £32,000. At most even with current terminal bonus rates it may yield a max of £35,000 on maturity. But if I surrender it and invest that £32,000 in a high interest account it will earn me £2,000 a year before tax plus I will have saved £600 in premiums. Is it really worth hanging on for what may be a smaller sum?

For my part I intend to sue the IFA who sold me the policy for negligence in the County Court in the sum of £5000 when the policy matures or is cashed in.

And something else you can do is consider boycotting any future / further policies from the original company behind the policy. In my case that means Sun Alliance who nowadays are behind the More Than insurance group.

 Dont get mad - get even. Even writing a letter of complaint is better than doing nothing.

And what these zombie fund companies dont want is for the policyholders to surrender their policies early - imagine if we all did that?

What can we (as normal everyday punters) do about this though ?

Complain to the FSA ?

I also have a Sun Alliance / Phoenix Endowment policy and I can tell you that Phoenix are being way more than cagey about releasing information.

They have refused to tell me how much annual bonus was added to my policy in December 2006 claiming they dont have to release this information until November this year. In previous years  they were very late releasing this information (May). This means I have no idea how much my policy is worth.

They refuse point blank to tell me how much money they are taking out of my premiums in service / maintenance charges though there is evidence they are taking such payments - its seems likely to me they are taking out more than they are putting back in with their poxy £30 annual bonus from 2005 and 2006.

 I cannot accept that our pooled fundings are being properly invested - how could the annual bonus ever be identical year on year, and what kind of adviser could only generate just £30 income from policies valued at £30,000 plus in one year?

They have not told me exactly how much was paid out in commissions to the adviser who sold me my policy claiming they are still investigating this - they have been "investigating" for more than two months now.

They have slashed the terminal bonus on these policies every year since they took them over and usually its three times a year - it was 90%+ when they took over the policy - its now a disgusting 34% and rest assured its only going to get worse!

They tell me that the terminal bonus is only applied to the assured sum and not the total policy value inc accrued sums through your annual bonus. So if like me you have an average 25 year endowment paying around £50 a month your total payment is nosediving and I have calculated I will only receive £35,000 at best when my policy matures in Nov 2008 - and frankly will be less as I expect Phoenix to slash the terminal bonus rate three more times in 2008.It may only be £32,000!!

Phoenix / Resolution had to give guarantees to the FSA when they bought out Sun Alliance Life business and to protect the underlying fund for the benefit of the policy holders. What benefits are we getting while Resolution generates cash ( our cash) to give to its own shareholders?

 

Hiya.

The reason why any insurer will be cagey about indicating what terminal bonus might be paid is because in the past decade it has become increasingly the case that what finally determines the maturity payout on a with profits (WP) policy is the terminal bonus.

In the past, you got a decent annual bonus, which was guaranteed and remained part of your policy and the terminal bonus topped up the annual one. Today, with markets gyrating as they do, companies are nervous of giving very large annual bonuses. So they hold back most of any money you might be hoping to receive and add it as a terminal bonus.

In turn, this means it is very hard for a company to tell you even how much you will receive next year, let along five years out, as a sharp stock market movement will affect the scale of a terminal bonus.

Now to your own policies. The compensation you received is calculated in order to place you back in the position you would have been had you not had the endowment but a repayment morgage, while funding your own life cover. Implicit in the compensation is an assumption that you would also surrender the policy, use it to pay off part or all of your loan and use the money saved from contributions into the endowment to increase payments into your mortgage.

You could still do all of that. A payment into a mortgage is equivalent to the same tax-free rate of return as the variable rate you are pying, so as long as there are no penalties involved in paying off part of the loan early, that could be a good option.

But I guess you are thinking: is it worth keeping up payments into the policy and hoping for better returns from that? There's £4,200 or so to still pay in, so I can see why you are asking!

That's a tough one. Fundamentally, you need to look at what the returns on the WP fund you are currently investing in have been in the past few years. That will give you an idea of how good/bad the investment managers still looking after that fund have been. Look at the past two or three years' annual statements on investment performance.

Another thing to look out for is what assets the fund is invested in.  WP funds holds assets in shares, property and fixed interest investments, as well as cash. The ratio used to be  very roughtly, 65/20/15. The less shares you hold, the greater the underlying security of the fund but less potential performance. So find out what the ratio is in yours. Phoenix should telel you that.

Based on these two factors, you then need to decide whether Phoenix will deliver the 6%-7%+ after charges. that an investor has a reasonable right to assume in the current investment climate - and which is available to you by repaying your mortgage more quickly. Bear in mind, however, that an element of your premiums include life cover, so strictly speaking that part of your monthly money is not invested.

Hope this helps. Good luck.

---

Editor, moneysupermarket.com

I have 2 endowment policies to cover a £30,500 mortgage - taken out in 1987

One for £30,500 and a second for £10,000 (taken out to cover a 2nd loan - repaid some years ago)

The costs are £47 + £23 per month - due to pay out in 5 years time - the policies have both received compensation (total £6500) (from Barclays due to Woolwich / long story) - my question is should I cash them both in now - if so - what to do with the £20k+ that they are now (combined) worth - because the annual bonuses are neglible.....

Secondly - if I do hang on to them until maturity - what terminal bonus am I likely to receive - Has anyone recently been in this position (how much terminal bonus did you get ?)

When I ask Phoenix (who have taken over the policies) - they are very cagey about this question !!!