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&#39WP payouts set to fall for 20 years&#39

Maturity values of with-profits funds will con-tinue to plummet even if the stockmarket rises 7 per cent annually until 2020, according to F&C.

It claims research reveals that a 25-year with-profits policy taken out in 1977 with a £50 monthly premium would have had a maturity value of around £75,000 at the end of last year.

But if the same policy had been taken out in 1995, the projected maturity value in 2020 would have plunged to around £25,500 – even if the FTSE 100 climbed by 7 per cent year on year and if payouts had not been cut by more than 10 per cent a year.

The firm says at the end of 2002, the average policy was still making maturity payouts in excess of its net asset value. According to Tillinghast-Towers Perrin, from which F&C obtained the research, an investor with a policy with an NAV of £60,000 was receiving a payout equivalent to a policy with a £75,000 NAV.

F&C director Jamie Farquhar says: “It is a great shame that life companies are in the position they are in – applying market value adjusters and reducing bonuses – but the chickens always come home to roost.” director Jo Roberts says: “The markets have changed drastically since 1977 and so have interest rates and inflation. Nobody knows what is going to happen over the next 17 years.”


TMB boosts packagers to 150

HBOS specialist lending subsidiary The Mortgage Business increased the number of packagers it does business with from 108 to 150 between 2001 and 2002. It says packaged business accounts for 65 per cent of its total lending, up from 3 per cent in 1997. TMB&#39s net mortgages advanced last year totalled £3.5bn compared with £2bn […]

Boxing clever

The world seems to have stopped for everything other than war. We have entered new political territory, with the Tories more likely to man the barricades than most of Tony Blair&#39s own troops.The announcement that the Budget will again take place in April makes some sense in terms of strategic planning on the battlefield but […]

Outside edge

Although I am sure most industry observers would agree that we are in the midst of a period of intense structural change, largely fuelled by regulatory and economic circumstance, I am less sure that there is consensus on the ultimate winners and losers.Nowhere is the debate more divided than across the life office/IFA divide, a […]

McVeigh replaces Seager at ailing Jupiter fund

Jupiter UK growth fund manager Justin Seager has been replaced by former Schroders star Ian McVeigh after failing to reverse the poor performance which had IFAs up in arms.Chief executive Edward Bonham Carter moved the manager from the fund although he continues running institutional money.Bonham Carter publicly backed Seager last December following a barrage of […]


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