Widows investors lose out on windfall
Sunday 28 November 1999
Members are to vote at a special meeting, scheduled for 22 December, on the proposed demutualisation of the insurer which would lead to it being sold to Lloyds TSB for pounds 6.7bn. If successful, an average of pounds 5,600 would be paid in compensation to with-profits policyholders.
What has emerged this week, however, is that thousands of people who have invested with Scottish Widows this year will be treated unequally in the event of a windfall.
Policyholders have all received a circular setting out terms and conditions for payouts. Every member who opened a with-profits policy before 22 June, the day before Lloyds TSB made its offer, will receive fixed compensation of pounds 500. There will be a further, variable payment for 900,000 investors who took out a policy before 31 December 1998.
The amount of variable compensation will depend on policy values and duration of membership. Estimates suggest that people investing pounds 100 would receive an extra pounds 76 for a policy started in 1998, pounds 5,300 for the same plan set up in 1988 and pounds 76,500 for one dating back to 1970. The proposed demutualisation is unanimously endorsed by the board.
Scottish Widows refused to disclose the number of new customers who invested in the first half of the year and so are ineligible for the extra money. But the figure will run into thousands. Last December's cut-off date has been criticised by some investors as arbitrary and chosen only for ease of administration.
While a company spokesman denied this, the amount of variable compensation will be calculated as a percentage of the reversionary bonus, and this bonus is declared at the end of every year. Administratively, therefore, it is easier to determine payouts if 31 December is the last day for eligibility.
Ultimately, new investors will benefit from the higher profits expected as a result of demutualisation - an argument put forward by Scottish Widows as justifying its decision not to include these members in the qualification for variable compensation.
- 1 Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
- 2 Greece debt crisis explained: A history of just how the country landed itself in such a mess
- 3 People all over the world are getting semicolon tattoos to draw attention to mental health
- 4 Greek debt crisis: Yanis Varoufakis's funniest (and most memorable) quotes
- 5 Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
Greece debt crisis explained: A history of just how the country landed itself in such a mess
German conservatives are destroying Europe with austerity, says economist Thomas Piketty
Man dies instantly after shooting firework from top of his head
Isis schoolgirl Amira Abase who fled London to join terrorists in Syria mocks victims of Tunisia massacre
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...