Family Finance

Huddersfield Daily Examiner (Huddersfield, England), July 30, 2008

Byline: By TONY HETHERINGTON

Q: I asked Prudential to transfer funds to Scottish Equitable, but the amount transferred was less than originally quoted. I phoned Prudential and was told simply that it was less because several weeks had passed. P.W.

A: The papers you sent me show that you had an investment policy with Prudential, and when you first inquired you were told this was worth pounds 6,315. Three weeks or so later you asked Prudential to move your money to Scottish Equitable. But Prudential replied, warning you there was now only pounds 6,078, and it is this fall that has left you puzzled. I am afraid Prudential is right though. The investment you have is basically a unit trust, a fund that holds shares traded on the stock market. In the weeks after your first inquiry those shares fell in value, so your units are worth less. Typically, companies that offer unit-linked funds warn that figures they quote are only estimates or are valid for a very short time. That is why Prudential has asked whether you still want to go ahead with the transfer after the fall.

Q: I am 75 and widowed and I have about pounds 80,000 in National Savings certificates. As interest rates have fallen over the years would I get more from an annuity? Mrs T.R.

A: You would certainly get more from an annuity, but an annuity is not like a bank account. You are not depositing your pounds 80,000; you are handing it over for ever and, in return you get an income for life. Different life companies offer different rates, so it is worth consulting a local financial adviser. There are also different types of annuity. Some start lower and rise annually. Others are fixed. And some pay your family if you die soon after the annuity begins. But as a guide I can say that Norwich Union would currently pay you the best level annuity, about pounds 7,460 a year.

Q: I have a Cash Sipp. Much has been made recently of the Government's pledge to guarantee anyone's account up to pounds 35,000. But as my Sipp exceeds this should I transfer the excess elsewhere? M.L.

A: Self Invested Personal Pension (Sipp) plans are increasingly popular with the self-employed and they allow you a large degree of freedom to choose where your money goes. They are covered by the compensation scheme, but only up to the maximum payout of pounds 35,000 for cash deposits or pounds 48,000 for stocks and shares. The Government has just cottoned on to this! It does not want people to have to operate multiple Sipps over many years of their working life, so it is planning new compensation cover. Wait and see what this amounts to.

Q: I read that Alliance & Leicester is being taken over by a Spanish bank. Is my money safe or should I move it? Mrs V.B.

A: Alliance & Leicester is being taken over by Banco Santander, which already owns Abbey. Your savings are completely unaffected, though it would be surprising if the Spanish owners did not close some branches or merge them with Abbey outlets.

features@examiner.co.uk