Cold shower for windfall fever

Personal Finance
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The Independent Online
THE windfall-ometer has been going wild this week. Up to 4 million savers and borrowers with the Alliance & Leicester building society should be up for windfall payouts of around pounds 600 each. Plans are afoot for the society to turn itself into a bank (see page 24). Elsewhere, 200,000 policyholders with insurer Provident Mutual will share pounds 25m as part of a takeover by General Accident. Then there's the fifty quid from the privatisation of the National Grid. Meanwhile, there's been talk of a windfall tax on the whopping profits of electricity and water companies. And even the Revenue announced it wants to give back a total of pounds 500m of tax to up to 6 million people. Apparently, we've been paying too much - particularly if we're non-taxpayers.

But amid such lottery-style fever, here are some twists to look out for.

First, there might be fewer winners than thought - and you might not be one of them. The Alliance & Leicester deal has yet to be officially announced. Its structuring could make everyone a winner, or it could aim to exclude recent savers. And, because of the obscurities of building society regulations, it could throw up some oddities that raise questions of fairness.

Take Lloyds' recent takeover of the Cheltenham & Gloucester. Many high- street C&G savers of up to two years' standing were getting nothing. But they were still asked to vote for a deal that included payouts to investors who might have just opened offshore accounts - certainly carrying no voting rights - and who might never have stepped inside a C&G branch.

Second, a windfall may not be worth as much as it seems. Long-suffering endowment policyholders with Provident Mutual will welcome the news of bonuses from the takeover by General Accident. But they should watch that other bonuses meant to reflect investment performance are not reduced.

Third, windfall taxes on bogeymen utilities are no "pain-free" tax. Quite the contrary. One obvious set of people who stand to suffer are the millions of private investors who are shareholders in these companies - and often shareholders in little else.

PERSONAL pensions salesmen became notorious some years ago for the lengths they would go to find sales. There were stories about sneaking into nurses' hostels and targeting redundant workers at dole offices. Now those salesmen's companies are being forced to review more than a million cases of alleged misselling, particularly people persuaded to leave safer employer-based pension schemes.

Trouble is, it turns out the likes of the Prudential and Legal & General are having problems finding those policy-holders. Up to a half have not replied to letters supposed to have gone out from the pension companies. It would be easy to blame this on companies' incompetence or note that it's not really in their interests to contact the policyholders. But part of the problem lies with the individuals, who have not replied or have moved and not passed on details. If you are reading this and you're a personal pension-plan holder, get in touch with your pension company. They should be able to confirm if you're affected and, even if you are not, get them to produce a written account of everything you've paid in and a reconciliation of the investment returns.

YOU may have noticed a new picture heading this column. The new personal finance editor is not rich. But I'd like my savings to make me richer. I don't like being ripped off and I want to understand what I'm buying. That's me and finance. It's also the aim of this Independent on Sunday section, Your Money. Letters are welcome, but don't send anything you want returned. We'll try to answer questions in these pages, but we can't reply individually.