A decade ago a major life office, like Standard Life, announcing its annual bonus payments was considered important financial news.
It would be covered in the City pages of national newspapers, and as the “bonus season” got underway, there would be further features in the weekend sections analysing which companies’ policies were paying the most, how payouts varied from previous years and so on. After all millions of people had their retirement and mortgage savings tied up in these complex plans, so needed to know how they were performing.
How times have changed. Last week Standard Life’s annual statement caused barely a ripple in the torrent of today’s 24-hour news cycle.
Most national newspapers ignored it completely. You could argue with-profits policies aren’t as popular as they once were. Many have cashed in their endowments, and who in their right mind is buying a with-profit bonds now?
But this overlooks the fact millions still have substantial investments in these often failing funds. Standard Life alone has 1.4m policyholders.
You could also point out that “Insurer cuts bonuses, again” does not really fulfil the “new” criteria in news.
There is another problem too. With the advent of the internet, rolling TV broadcasts, and ever-shrinking newsdesks there is a bias towards strong punchy stories, that can be delivered quickly and are easy to understand.
Standard Life cuts bonus rates on some policies but not on others, while applying varying terminal bonuses on other plans, does not neatly fit this mould.
“Payouts in terminal decline after falling 25 per cent in five years” is certainly a compelling line. But it still does not lead to the “sell your assets now”-type story, beloved by over-excited news editors.
The picture is a little more complex: are there guarantees, a toxic exit penalty, or an maturity bonus soon? Or are the pootling returns not too bad when compared to what you could get elsewhere.
The life companies themselves certainly do all they can to make reporting such stories as difficult as possible. Standard Life’s announcement, for example, mentioned bonus rates, it mentioned plan values had increased, and pointed out that MVRs were on the wane. But was there any mention of how bonus rates compared to those paid a year ago? What do you think?
It is not just journalists who no longer seem interested in with-profits policyholders. While Standard Life continues to run the funds and administer the policies it once sold by the bucket-load, most insurers have washed their hands of this business altogether now it is no longer as profitable.
Let’s not forget these are the same companies that penalised customers who stopped or altered premiums because their circumstances had changed. The bleating excuse was that these were ‘long term’ savings plans.
But insurers have not kept their side of the bargain. Funds have been sold on, and the nature of the investments have changed beyond all recognition.
What is the point of a plan that aims to smooth out the ups and downs of the stock market if most have very little exposure to shares at all!
And finally I wonder whether advisers too have lost interest in these customers. Are many advisers who earned 8 per cent-plus selling with-profits bonds now contacting customers to see how these investments have fared?
And are those left holding ‘zombie’ funds inclined to pay £500 to have this policy reviewed to see whether it has one of these fabled guarantees? I doubt it on both counts. These customers have been badly let down by the the financial services industry, but sadly these days that barely counts as news either.
Emma Simon is deputy personal finance editor at the Telegraph Media Group