Questions of Cash: Am I losing out on a dividend from Lloyds?
Friday 19 April 2013
Q. In Questions of Cash [6 April], your reader NR complained about his dividends from Lloyds Banking Group having gone astray. I am a long-suffering shareholder and would be overjoyed to receive a dividend, but they are not being paid. Have I missed something? JA, Staffordshire.
A. No dividends have been paid by Lloyds since October 2008 – on ordinary shares. But the reader holds preference shares that were converted from Halifax perpetual subordinated bonds and were initially issued by the Halifax when still a building society as permanent interest-bearing shares. Lloyds Banking Group was prevented from paying dividends on its ordinary shares as part of the rescue by the Government.
Q. I have two small pension pots, one is with Equitable Life and the other is with Aviva, which I started after the Equitable Life crisis. At the end of last year, I had £8,137 with Equitable Life and £2,635 with Aviva. Over the last seven years, the Equitable Life pension fund grew by 27 per cent and the Aviva fund by 43 per cent. If I move out of the Equitable Life fund, I will have to accept a transfer penalty of £1,320. I wonder if it is worth me doing that to benefit from a better return from Aviva? I am 25 years away from the earliest date at which I might want to draw a pension. HW, by email.
A. Danny Cox, a financial planner with Hargreaves Lansdown, says: "If we assume the Equitable Life rate of return of 3.5 per cent continues for the next 25 years, and I think higher returns are unlikely, the value of the pension pot will be £18,577.98. Transfer subject to the penalty and invest the £6,816.63 in an alternative pension and the rate of return from the new pension fund would need to be 4.25 per cent to match the return from the Equitable pension. Therefore the question is, will the Aviva pension achieve an average growth rate of 4.25 per cent after charges over the next 25 years?
Much of this depends upon the fund chosen. If a cash fund is chosen the answer is definitely not, and in a with-profits fund, highly unlikely. However, a stock market-based fund should exceed this rate and provide a better return, although this is not guaranteed. As an example, the Aviva Mixed Investment 40-85 per cent fund is a middle-of-the-road managed fund and has averaged 8.7 per cent return over 10 years and 5.96 per cent over the last five years. Past performance is not a guide to the future.
My preference would be to consider moving both funds to a low-cost Sipp where this provides significantly more choice, including low-cost tracker funds. With 25 years to go there is plenty of time to take stock-market risks and aim to grow the pension pot. I would opt for the likes of Invesco Perpetual Income, Marlborough Special Situations and potentially an emerging markets fund such as First State Global Emerging Market Leaders."
Q. My mother died in 2009. A firm of solicitors was named in the will and they took over the role of estate executors, even though they were not named as executors in the will. This firm of solicitors has charged more than £8,000 as executors of an estate worth about £200,000. Speaking to other firms of solicitors, I am told that this work will normally cost between £1,000 and £2,000. What can you advise? AN, by email.
A. We made contact with the firm of solicitors, which sent us a short statement saying it would not co-operate or respond to us as the matter is "confidential and privileged". It then emailed you threatening legal action for libel for having referred the matter to us. We regard this as a very unhelpful and aggressive response. However, given the threat of legal action, you have instructed us not to pursue the matter, or name the solicitors.
So the firm's tactics, which we regard as no less than bullying, have worked. We do not believe the firm of solicitors has acted in a professional way in its response to your enquiry or ours. We therefore suggest you lodge a complaint against the firm with the Solicitors Regulatory Authority – details of which are on its website, www.sra.org.uk. You have previously contacted the Legal Ombudsman, which we understand decided that it was unable to adjudicate on the matter of fees as it is now out of time.
Q. You discussed in Questions of Cash [16 and 23 March] the anomaly by which UK pensioners who retire in many Commonwealth countries do not receive annual inflation-linked upratings. I have been following this story for several years as I have family and friends in South Africa. Readers ought to know that these rules do not apply to Members of Parliament. QR, by email.
A. We are advised by the Parliamentary authorities that you are wrong. MPs pay into the Parliamentary Contributory Pension Fund, which we are informed is covered by the same legislation as the state pension and has the same conditions attached to it. So you can rest assured that if your MP retires to South Africa, Australia or one of the other countries where pensions are not uprated after inflation, they will suffer in the same way as your family and friends.
Q. I ordered an office chair from Furniture@Work more than a month ago and was promised a 24-hour delivery. After 48 hours of waiting in, I ordered a chair elsewhere and phoned to cancel the order. I have since been trying to obtain a refund and even paid a £12 cancellation fee, but nothing. KD, by email.
A. We also did not receive a reply to our communications, but you have now received a refund of £164.40 for the chair, plus the £12 cancellation charge. We hope this was the result of our intervention.
Questions of Cash cannot give individual advice. But if you have a financial dilemma, we’ll do our best to help. Please email us at: email@example.com
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