Following Standard Life's demutualisation, large numbers of their with-profits policyholders have demanded cash surrenders. The company has set aside just £16 million for this, which has been described as 'woefully inadequate'.
The funds poor performance has also prompted investors to surrender their policies, as actual returns on a £50 per month 25-year policy maturing on February 1st 2006, for Standard Life's with-profit regular savings plan, show it is one of the worst performers. The return was £31,713 less than that of the top performer.
Standard Life are offering with-profits bond holders a series of different alternatives in which to invest their money, with average cash enhancements of 0.75% of the investment being added. Monthly premium with-profits policyholders are also being offered alternative enhanced monthly premium investments from throughout the Standard Life range.
Our view
It was inevitable that investors would leave once they had received their payout although many will miss out on the loyalty shares.