Scottish savers windfalls bonanza

By DAILY MAIL REPORTER
Updated: 19:00 EST, 15 September 2000

Nearly a million insurance policyholders are in line for windfalls as predators gather round the remaining mutuals.

Windfalls of about £3000 could be winging their way to 600,000 Policyholders of Scottish Life if a deal to sell the mutual pension provider comes off. And 325,000 with-profits customers of Edinburgh-based life insurer Scottish Provident started to receive an average £600,000 following Abbey National's £1.6bn offer.

GE Capital, the financial services arm of US conglomerate General Electric, the largest company in the world is thought to be favorite to buy Scottish Life, the mutual pensions provider.

Yesterday Scottish Life issued anti carpetbagging measures despite refusing to comment on what it terms 'speculation'. It says that only qualifying policies either existing or pending on September 11, 2000 will be eligible to benefit from a windfall should it arise.

Of the 600,000 existing Scottish Life policyholders only half are invested in the with profits fund and would be eligible to receive the full windfall.

Owners of ineligible policies would only get about £500 in windfalls as compensation for loss of voting rights. Once all policyholders have received £500, what's left works out at about £3,000 for each qualifying policy. Depending on the structure of the deal, the windfall may come as cash or a top-up to existing policies. Meanwhile, Scottish Provident's customers will be asked to vote on the Abbey National bid.

Anyone who took out a policy with some element of life insurance in it before January 1, 1996 qualifies for a flat £500 windfall. This 1996 cut-off date does not apply to with-profits policies. Any with-profits plan taken out before April 6, 2000 will qualify for a windfall. The average £4,500 windfall for with-profits customers includes the £500 flat payout. They will also get a further payout averaging £1,500, which will be added to policies alter on.

Qualifying customers will be sent voting packs in the spring and, if 75% of those who vote agree to the deal, then windfall payments are expected to be sent out next autumn.