Standard Life – a look at how financial firms lose your money
Iconic insurance and pensions companies spend massive resources on public relations and advertising to try and persuade you that they are the best guardians of your personal wealth.
Standard Life is one of those firms, but how do they treat your money?
Here are some recent headlines from this month about Standard Life -
Investment failure
Standard Life was fined a record £2.45 million by the Financial Services Authority after losing £100 million of investors’ savings supposed to be held in cash.
Almost 100,000 investors saw an average of just under £1,000 wiped off their pension savings overnight when Standard Life bet on toxic debts.
The FSA said investors were misled about the investment risks of the fund and criticised the firm for failing to investigate customers’ concerns.
The £2.4 billion Pension Sterling Fund was sold as a low risk home for savings for those close to retirement. Standard Life promised to hold all the money in cash but put almost half in to complicated financial instruments, including toxic mortgages issued by bank Northern Rock. Less than a fifth of the fund was held in cash.
Endowment and pension failures
Nearly every Standard Life endowment maturing this year will fail to pay off the mortgage it was taken out to cover.
The company has admitted a 97% failure rate for mortgage endowments to hit investment targets.
A man who paid £50 a month into a 25-year mortgage endowment maturing today pays out £26,869, compared to £31,066 last year - a 13.5% drop.
Payouts on endowment plans and pensions are also down 13.5% and 5% compared to those maturing last year.
A typical 25-year term, £50-a-month savings endowment pays out £28,139 today - down from £32,534 last year.
A 20-year individual pension plan is £82,301, down from £87,095. The figures are based on a man retiring at age 65, paying £200 per month.
The FTSE 100 rose by almost 20% last year, the company revealed the value of its savings endowments and pensions grew by just 3.8% and 7.9% respectively.
ISA failure
Standard Life’s advertising boasts the company’s instant access ISA offers a market leading 2.65% interest rate to savers while inflation is running at 2.9%. In reality, anyone with savings in a Standard Life ISA is losing at the rate of 0.35%.
Importance of independent advice
A recent survey found that about 66% of people fail to take independent financial advice before giving their money to a.
QROPS Adviser could have helped many of the Pension Sterling Fund investors who are contemplating a retirement overseas or may have already moved from the UK.
Their money would have been much safer and under their control if they had completed a successful QROPS transfer.
Much of the cash was pension funds waiting for transfer to an annuity. A QROPS removes the requirement for a QROPS pension holder to buy an annuity and offers more flexible tax and investment options than a UK pension.
