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The £137bn trap
Tony Hazell, Daily Mail
2 September 2003

MONEY MAIL today launches a campaign demanding justice for millions of savers trapped in funds that insurance companies have abandoned.

Savers who for years have poured their hard-earned cash into  endowments, pensions and bonds now find their money trapped and earning derisory returns. And there is nothing they can do about it.

Many won't even realise they have a problem until it is too late and they discover their pensions and endowments are worth thousands of pounds less than they had expected.

We have carried out a comprehensive survey of insurance companies for details of their closed funds. Our research reveals that at least £137 billion is trapped in more than 40 closed funds.

Closed fund name Size £
Abbey Life/Hill Samuel/Target Life £9.6bn
Alba (Crusader, FS Assurance,
Life Association of Scotland)
Barclays Life 4bn
Britannic 6bn
Colonial 3bn
Eagle Star 3.3bn
Equitable Life 20bn
Guardian 8.2bn
Halifax Life/Leeds Life 974m
Lloyds TSB Life 7.25bn
London Life 3.1bn
Manulife 617m
NM Financial Management 326m
NPI 7.1bn
Pearl 11.4bn
Phoenix/Royal Life/Sun Alliance 24.7bn
Provident Mutual 3bn
Scottish Mutual 9.7bn
Scottish Equitable 7.7bn
Windsor Life (inc GAN,
Aetna, Regency Life)
Woolwich Life 293m
Total 137bn

MICK and Linda Probert from Bracknell, Berkshire are stuck with two badly-performing Abbey Life endowments.

Abbey Life closed to new business in 2000, and is run by Scottish Widows, which in turn is part of Lloyds TSB. Personal assistant Mrs Probert, 40, took out a 25-year, £50-a-month endowment when she was single in 1989, and took out a further 23-year endowment for £3,800 two years later costing £8 a month. Growing at 4% a year, the 25-year plan has a £12,254 shortfall on its £30,000 target, and the 23-year plan has a £2,084 shortfall.

As it is a unit-linked endowment, they can't sell it. The cash-in values are very poor, and they will forfeit a special 6% bonus that is added to plans that manage to make it through to maturity. If they stop paying in, the cost of the life insurance will continue to be taken out of the value of the plan.

A Scottish Widows spokesman admits that this can 'exhaust' a fund - in other words, use up all the money in it.

Engineer Mr Probert, 49, says: 'There is the hope that over the next 11 years the stock market will bounce back and the policies will make money. But given Abbey Life's performance so far, that seems unlikely. I think we should be able to get out without penalty.'


We say 'at least' because some, including Friends Provident, Lincoln Financial Group and Scottish Provident, refused to provide figures.

Those that responded admitted to having more than 12 million policies made up of 6.8 million pensions, 4 million endowments and 1.2 million bonds.

They include many household names which people trusted with their savings, such as London & Manchester, Pearl, Royal & Sun Alliance and Guardian