Standard Life limits withdrawals from property funds
by Gill Montia
Standard Life has placed limits on withdrawals from some of its property funds.
Investors in up to six of the insurer’s commercial property funds have been told they will have to wait for six months to redeem their cash.
Policyholders who are withdrawing their investments because they are retiring will not be affected, nor the beneficiaries of policyholder who have died.
Last week the Norwich Union placed similar restrictions on its unit-linked life and pensions’ property fund.
Both companies are limiting withdrawals because the credit crisis and property market downturn mean it takes longer to sell the funds’ assets at a reasonable price.
According to Standard Life, the move will protect investors, “including those who intend to remain invested over the medium to long-term”.
Standard Life has also reported that its with-profits funds shrank by between 0.3% and 20.2% in 2008.
In the case of the fund that backs payouts on mortgage endowments, the value dropped by 10.2%.
As a result someone who has invested £50 a month for 25 years will now receive a payment of £31,066 down 18% from the £37,763 an equivalent policy would have produced a year ago.
Furthermore, a £200 a month pension plan taken out 20 years ago now has a maturity value of £87,095 down from £92,735 this time last year.
Last week, Standard Life made the headlines by proposing to reimburse some customers whose savings have lost value because they were invested in its Sterling Fund.
The £2.4 billion fund has lost 5% of its value, or around £1,237 per investor.
The company has acknowledged that some savers believed it to be a cash fund, which is not the case because it also holds asset backed securities.