A week's a long time in ... finances

'Doesn't the petrol blockade illustrate vividly that oil still underpins everything we do'

What a week. The proposed merger between the London Stock Exchange and Frankfurt disintegrates, prompting a bidding war, and the roads of Britain come to a halt thanks to a good, old fashioned 1970s-style oil panic.

What a week. The proposed merger between the London Stock Exchange and Frankfurt disintegrates, prompting a bidding war, and the roads of Britain come to a halt thanks to a good, old fashioned 1970s-style oil panic.

To cap it all, Nomura withdraws its bid for the ill-fated Dome, prompting speculation that the bulldozers will move in before the year is out.

There is one comforting bit of business as usual, however. Yet another windfall story. This time the lucky candidates are with-profits policyholders with Scottish Life, which is being bid for by US giant GE Capital.

As news of the £1bn deal came to light Scottish Life put in place measures to block carpetbaggers. The mutual life company said only those people who had become members by the close of business on Monday, 11 September, would potentially be eligible for payouts.

The deal will trigger windfalls of between £3,000 and £4,000 each for qualifying policyholders. Scottish Life has 500,000 to 600,000 policyholders, but only about half have with-profit policies that would qualify for payments.

One reason Scottish Life is only getting roughly half the price of rival Scottish Provident, which was knocked down to Abbey National last week for £1.8bn, is that the former is far more heavily exposed to the pensions business. As we explain in our pensions guide (see opposite page), the introduction of stakeholder pensions next April will cause problems for a lot of traditional providers, like Scottish Life. This is because the Government has designed stakeholder to have as low charges as possible, so that even the less well off can afford to save for old age.

This in turn means the medium-sized players like Scottish Life will be unable to make a decent profit out of the new stakeholder business, forcing them to sell up.

As for Scottish Life's policyholders, there is a long way to go between being informed that you are entitled to a windfall, and actually getting a cheque in your hot little hand. For instance, roughly 20,000 customers of Scottish Widows have yet to receive their payments, despite selling out to Lloyds TSB last year.

Scottish Widows started sending cheques out to its 1.62 members in August this year, and although 1.5 million have received them so far there are still 100,000 windfall payments looking for a home. Many of these consist of customers who have "gone away" without leaving a current address with Scottish Widows. There are also difficulties in establishing ownership, for example with annuities where the person receiving the pension is not the same as the policyholder.

If you think you might be one of Scottish Widows' "lost" members, give them a call on 0345 600 100.

One last thought. Doesn't the experience of the petrol blockade, where a handful of protesters almost brought an entire nation to its knees within a matter of days, suggest that the so-called "old economy" is not quite as unimportant as some would suggest? The evidence of this week illustrates vividly the way oil underpins everything we do.

Sadly, I cannot extrapolate this point into a handy share tip, and suggest you buy BP Amoco, for instance. Oil company shares tend to go up in anticipation of crude oil prices, and now the short term trend for most oil shares seems to be downward. But there is a wider point to be made. Whatever advances there are in the "new economy" of technology, media and telecoms, it is still underpinned by the old, and investors ignore that fact at their peril.

* The writer is the Personal Finance Editor of 'The Independent'

* j.willcock@independent.co.uk

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