This customer information notice is a summary and so does not set out all of the detailed aspects of the Mortgage Endowment Promise.

 

Contents

 

 

Introduction

In September 2000, The Standard Life Assurance Company issued the Mortgage Endowment Promise ("the MEP") to the majority of our UK and Irish mortgage endowment planholders.

The MEP provided that, subject to the fulfilment of a number of conditions, including in relation to the growth in Standard Life's capital, an eligible plan would meet its targeted value at maturity as long as the "6% per annum test" was met. Under the MEP, the 6% per annum test would be met if the earnings on the assets backing the plan were on average at least 6% per annum (after tax) from 28 September 2000 to the maturity of the plan.

On 10 July 2006 The Standard Life Assurance Company demutualised. As part of the demutualisation Scheme, which the Scottish Court approved on 9 June 2006, the MEP was revised to ensure that the obligations in respect of the MEP could operate with certainty and in a manner that was fair to all planholders.

There was no change to the operation of the MEP when the Standard Life Assurance Limited business transferred to Phoenix Life Limited on 27 October 2023.

Entitlement to any payment under the MEP is exclusively determined on, and subject to, the terms and conditions set out in the Scheme.

Back to the top

 

 

MEP Top Up Planholders

Projections carried out shortly after the MEP was introduced showed that certain eligible planholders ("MEP Top Up Planholders") would have a shortfall when their plans matured, even if the future earnings on the assets in which their plans were invested were on average 6% per annum (after tax). Therefore, the MEP also provided that, subject to fulfilment of the conditions of the MEP, a top up payment would be paid to each of these planholders on maturity to reduce the impact of any shortfall. The maximum amount of this potential top up ("the Maximum Top-Up Amount") was equal to the shortfall estimated at the time those projections were made, assuming that the earnings from that time until maturity on the assets in which their plans were invested were on average 6% per annum (after tax). This was communicated to each MEP Top-Up Planholder shortly after the MEP was introduced.

Back to the top

 

 

How does the MEP apply to MEP Top-Up Planholders?

Working out whether a payment is due under the MEP for MEP Top-Up Planholders and, if it is, the amount of the payment, involves the following steps:

We calculate the shortfall amount. This is the amount by which the actual maturity value falls short of the targeted maturity value. If the actual value exceeds the targeted value there is no shortfall amount and there is no payment under the MEP.

Subject to its not exceeding the Shortfall Amount, the amount payable under the MEP will be either:

  1. the Shortfall Amount if the 6% Per Annum Test is satisfied in relation to a MEP Policy or;
  2. the Maximum Top Up or Shortfall Amount, if less, if the 6% Per Annum Test is not satisfied in relation to a Top Up MEP Policy

Unless the 6% Per Annum Test is satisfied, payments will be only made under the MEP to Top Up MEP policies.

If you have any queries about the payment that may be made under the MEP please contact us on the number below

Back to the top

 

 

What does this mean for MEP Top-Up planholders?

The MEP amount you will receive depends on the investment returns on your policy. It is, therefore, not possible to determine the exact amount of your MEP payment until the maturity date of your plan. It could be lower or higher than the amount shown on your statement.

The MEP payments are intended to be broadly equivalent to what might have been paid by The Standard Life Assurance Company if it had remained a mutual company, in accordance with the letters it sent to MEP Top-Up Planholders following the announcement about the MEP made in the UK in October 2004 and in Ireland in January 2005.

In general it seems unlikely that MEP policies will meet the 6% per annum test, at least on a short to medium term view of potential investment returns. The outcome of the test for an individual plan will only become known at its maturity date. It must therefore be emphasised that it is not possible to determine accurately the amount, if any, that will be paid to a MEP Top-Up Planholder until the relevant plan has matured.

Back to the top

 

 

How will MEP Plans remain eligible under the MEP?

In order to qualify for a payment under the MEP, a MEP Planholder must also satisfy certain eligibility criteria. These criteria must be met from the first review of your MEP plan, following the introduction of the MEP, up to your plan maturity date:

  1. All payments due from you under your plan must have been made in full; and
  2. Your plan must have remained fully invested in with profits or the managed fund, or a mix of these.  

We will not make any MEP payment if, at any time during that period:

  1. You reduce the payment amount (except if you change the plan from two or more lives to single life);
  2. You change the term of your plan;
  3. You partially or fully cash in your plan or stop payments permanently or use the Early Maturity Option (if this applies to your plan); or
  4. The plan is absolutely assigned to a third party (except in the case of divorce/dissolution of civil partnership) including, for example, by sale as a Traded Endowment Plan or by way of a gift.

If you are contemplating altering or assigning your plan, and you are not sure whether this will cause your plan to cease to be eligible under the MEP, call our customer services department on 0345 60 60 003 between 9am and 5pm, or speak to your independent adviser. If for any reason you are in doubt about the implications of such loss of eligibility, we strongly recommend that you consult your solicitor or independent adviser.

Calls may be monitored and/or recorded to protect both you and us and help with our training. Call charges will vary.

Back to the top