Standard Life policyholders in line for cash handouts

Millions of beleaguered savers are in line for windfalls from Standard Life, the life insurer, which yesterday proposed to abandon its staunch adherence to mutuality and convert to a public company.

Millions of beleaguered savers are in line for windfalls from Standard Life, the life insurer, which yesterday proposed to abandon its staunch adherence to mutuality and convert to a public company.

Some 2.6 million policyholders stand to gain payouts in cash and shares of as much as £2,000, if the company is valued at current estimates of about £4bn.

The board's recommendation is a stark U-turn from its previous hardline stance on mutuality. In 2000, it waged a bitter battle against policyholders who were trying to get the company to embrace conversion. The business was then worth about £16bn, which would have given policyholders payouts of about £6,000 each.

"The management came to the conclusion it did then based on the circumstances at that time," said Sandy Crombie, the chief executive of Standard Life, who was deputy chief executive at the time.

The demutualisation proposal will be put to members - but not until 2006 because of the complexity of the legal arrangements. Standard needs the support of 75 per cent to convert the company and yesterday it scrapped the rule banning windfalls for three years from members joining since 2000.

It also announced yesterday that it would axe 1,000 jobs in the UK to cut costs by 20 per cent and also closed its final salary pension scheme to new employees. The job cuts come on top of 360 this year.

Since 2000, Standard has lost billions on the stock market and it ran into trouble in January when regulators introduced new solvency tests. The company was forced to set aside more reserves and has had to dump £7.5bn of shares, cut bonuses and raise charges to customers to meet the new rules. It is also planning to raise £750m, and yesterday said it needed to pull in more capital through a stock market float.

The board said the solvency regime was not behind yesterday's decision. The main reason was that the number of customers buying with-profits policies was dwindling.

The prospect of a windfall will be welcome to many policyholders. Some maturity payouts have been cut by 45 per cent since 2001.David Stonebanks, who collected more than 1,200 signatures supporting demutualisation last year, said yesterday: "I am sorry that the company is now having to recommend demutualisation from a position of weakness rather than strength."

Ronnie Sloan, another policyholder who supported demutualisation in 2000, said yesterday: "Only four years after robustly rejecting a demutualisation campaign, it is surely hasty to present demutualisation as a virtual fait accompli. Who comprises the Standard Life - is it really the with-profits policyholders, or is it just the Board?"

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee