Scottish Widows has paid out £335m in the first of its loan notes compensation to with-profit policyh...
Average payments totalling £5,701 have been made to about 955,000 SW members holding with-profit policies since payments began last August, however policyholders who had opted to receive loan notes only received their first payments earlier this month.
More than 67,000 qualifying members previously elected to receive their compensation in the form of loan notes as a result of the transfer of Scottish Widows.
The scheme is thought to be a first in UK financial services history as Scottish Widows created the concept of loan note payments specifically to help members - who would gain large windfalls above £7,200 - reduce or defer capital gains tax.
According to a spokesman for Scottish Widows, more than 49,000 loan note holders have redeemed all or part of their loan notes to take advantage of the tax benefits of using rather than claiming the windafall in cash.
"This option was particularly attractive to those qualifying members who expected their compensation, together with any other taxable gains during the tax year ending 5 April 2001, to be more than the capital gains annual allowance, £7,200. The next opportunity for loan note holders to redeem will be in September," says the spokesman.
Interest payable on loan notes over the next interest period has now been set at 4.8326% per annum.
The next opportunity to redeem loan notes will take place on 30 September. Loan note holders must submit their redemption instructions by 31 August in order to be able to redeem in September.
Loan notes can be redeemed every six months thereafter until 31 March 2008, subject to the terms and conditions of the loan notes.
£300bn of liabilities
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Transfer from occupational scheme
Appointed by FCA and PSR boards