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Daily Insurance Industry News
Wednesday 22nd of May 2019
October 1, 2007

Standard Life with profits see value fall

by Richard Kilner

Story link: Standard Life with profits see value fall

Standard Life with profits see value fall

More bad news for Britain’s beleaguered pensioners as the insurer Standard Life’s payouts on with-profits pensions crumble to just two-fifths of their value five years ago.

According to a survey by Money Management magazine, a saver putting £200 per month into a Standard Life with-profits pension for 20 years will have a sum total of £94,752. Comparing to a cash fund by the damaged Equitable Life (which would accrue £90,510 in the same conditions) shows the dire state of Standard Life’s situation.

Hargreaves and Lansdown, industry advisers, believe that Standard Life’s problems began back in 2000, when it judged the market inaccurately and paid out too much, leaving present pensions depleted of funds.

Annuity Direct calculate that the £94,752 pot would give an annuity of just £525 per month to a man of 60. In 2002 identical contributions to Standard Life would’ve raised a pot of over £240,000, paying out £1,350 monthly. The present payouts are 61% short of this.

A single payment of £10,000 made twenty years ago would yield just £52, 687 with Standard Life, giving a 60 year old man an annuity of £292 per month. The income from a similar fund in 2002 would have given £888 per month, a 66% fall in five years that has seen the FTSE 100’s value rise by 66%.

Standard Life state that less than 21% of the fund is in shares, with 70% in cash or fixed interest. The organisation also asserts they have been benefiting from robust with-profit increases.

 

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