Scottish widows pension rip off?

[tight fart]

Am I being ripped off by Scottish widows or is this normal now?

I took a commercial mortgage out around 1992, Barclays suggested I have a pension linked mortgage (insisted)
This was supposed to clear the mortgage of £50k in 2020 and also give me a small pension.

Realising it was going the same way as endowment mortgages I changed the mortgage some time later but kept te pension going,

The pension is a with profits, and every year I get an annual statement telling me how good they are doing, since
2010 the with profit fund should have grown by around 50% (6 years compound interest)

They stopped applying any to mine around 15 years ago and I don't receive any bonuses now?

I've complained till I'm blue in the face and never get a straight answer,

Anybody know who I can ask to get to the bottom of it?

[sidicks]

tight fart said:

Am I being ripped off by Scottish widows or is this normal now?

I took a commercial mortgage out around 1992, Barclays suggested I have a pension linked mortgage (insisted)
This was supposed to clear the mortgage of £50k in 2020 and also give me a small pension.

Realising it was going the same way as endowment mortgages I changed the mortgage some time later but kept te pension going,

The pension is a with profits, and every year I get an annual statement telling me how good they are doing, since
2010 the with profit fund should have grown by around 50% (6 years compound interest)

Where are you getting the figure of 7% annual return from?

tight fart said:

They stopped applying any to mine around 15 years ago and I don't receive any bonuses now?

You may not receive any annual bonuses (are your sure they've declared nothing since 2000?), but you are likely to receive a decent terminal bonuses at maturity which will (broadly) equate to the difference between the value of your policy with current level of bonuses and the actual value of the underlying assets.

Declaring lower (zero) bonus now increases investment flexibility (and hence potential for higher returns) in the future.

Edited by sidicks on Wednesday 25th May 10:39

[tight fart]

It's on the back of my bonus notice.

[sidicks]

Is yours a unitised or a conventional with-profit pension contract (presumably the latter)?

As above, even if reversionary bonuses are not being added, this is just building up the pot for a larger terminal bonus at maturity.

Edited by sidicks on Wednesday 25th May 10:51

[Ozzie Osmond]

tight fart said:

since 2010 the with profit fund should have grown by around 50% (6 years compound interest)

In your dreams, matey. Where have you got that idea from?

The fund would need compound returns of 7% p.a. to achieve that AFTER adopting a conservative investment approach. That just isn't anywhere near likely in this decade.

Don't forget that With Profits is a smoothed return and the industry has been criticised as being "Without Profits" for many years.

[The Leaper]

If you want the issue to be independently investigated you can contact The Pensions Advisory Service. Their services are entirely free, and their advice etc is impartial.

R

[Ozzie Osmond]

You could contact Scottish Widows and ask them to tell you the current rate of Terminal Bonus, as mentioned by Sidicks. It's not guaranteed but might give you a useful steer.

See this link for some potentially useful background about performance, smoothing and bonuses,
https://www.trustnet.com/Factsheets/Factsheet.aspx...

[sidicks]

Ozzie Osmond said:

In your dreams, matey. Where have you got that idea from?

The fund would need compound returns of 7% p.a. to achieve that AFTER adopting a conservative investment approach. That just isn't anywhere near likely in this decade.

Don't forget that With Profits is a smoothed return and the industry has been criticised as being "Without Profits" for many years.

See above!

The fund isn't that 'conservatively invested'.

40-50% in shares plus 13%bin property plus 10-15%bin 'other'. (I.e. Only 25% in bonds, which have performed well due to falling interest rates.)

Thinking about future returns for policyholders, most importantly, the return is a function of both reversionary bonuses as well as terminal bonuses. In the low rate environment, low RBs should not be unexpected!

Edited by sidicks on Wednesday 25th May 11:59

[sidicks]

Ozzie Osmond said:

You could contact Scottish Widows and ask them to tell you the current rate of Terminal Bonus, as mentioned by Sidicks. It's not guaranteed but might give you a useful steer.

See this link for some potentially useful background about performance, smoothing and bonuses,
https://www.trustnet.com/Factsheets/Factsheet.aspx...

Current bonus rates might be shown on the bonus notice from which the OP would have got the recent return data.

[tight fart]

They told me a few years back, as it was a guaranteed min annuity of 9% they wouldn't add any bonuses.
Trying to read through some of the paperwork in this years bonus notice states "policies started before Feb 1999
will not get regular bonuses as they have higher guarantees".

[sidicks]

tight fart said:

They told me a few years back, as it was a guaranteed min annuity of 9% they wouldn't add any bonuses.
Trying to read through some of the paperwork in this years bonus notice states "policies started before Feb 1999
will not get regular bonuses as they have higher guarantees".

Seems reasonable.