`Scottish Widows has come up with a fiendishly complex payout plan'

ANOTHER WEEK, another windfall. Hard on the heels of the Bradford & Bingley's payout plan for its demutualisation come the proposals from Scottish Widows on how to compensate its 1.6 million members when it sells up to Lloyds TSB.

Where the B&B proposed a "flat" distribution plan for its members - everyone will get about pounds 1,000 each - Scottish Widows has a far more complicated plan for its own demutualisation.

The simplest part is that all 1.6 million eligible members will get a flat payment of pounds 500 to recompense them for loss of their voting rights. On top of that, however, comes a fiendishly complex plan to compensate with-profits policy holders depending on what type of policy they bought and how much they have already paid into it.

Scottish Widows customers are to receive these draft proposals this week and next, in a huge mailing operation to over two million households. This will include more than 400,000 Scottish Widows customers with PEPs, unit trusts and ISAs, who will get nothing.

In a fine sense of timing, actuaries warned separately this week that with-profits products face extinction as a species over the next 10 years - not least because the public finds them too complicated to understand.

Fraser Low, president of the Faculty of Actuaries, said that the complexity of charges for with profits funds - many of which were incomprehensible even to experts - were confusing consumers and the Government.

Scottish Widows has done its best by sending out a 100-page circular and 12-page "Your Questions Answered" brochure to all members. A further problem is that it can only provide estimates of what you are set to get, as it cannot start calculating definite payouts until after 3 March 2000. Members will vote on the deal at a Special General Meeting in Edinburgh on 22 December. You can also vote by proxy using forms included with this week's circular.

Who gets what? A few examples

n pounds 50 regular monthly with-profits premium into an endowment, versatile endowment or regular premium unitised life assurance policy since 1989 might get pounds 2,250.

n pounds 50 regular monthly with-profits premium into low-cost endowment policy since 1989 might get pounds 1,730.

n pounds 50 regular monthly with-profits premium into a whole-of-life assurance policy since 1989 might get up to pounds 1,390.

n pounds 15,000 single with-profits premium into a single premium life assurance policy in 1995 might get pounds 6,670.

n pounds 50 regular monthly premium into a regular premium with-profit pension policy since 1989 might get pounds 2,750.

n pounds 10,000 single premium into a single premium with-profits pension policy since 1989 might get up to pounds 10,300.

If you are in doubt, consult your independent financial adviser. For more general information you can also call the Scottish Widows helpline on 0345 600 100 if you are in the UK, or +44 131 446 0055 if calling from elsewhere. The lines are open between 8am and 10pm on weekdays and between 9am and 5pm at weekends