Top up tomorrow at the Nationwide

Boost your windfall if the society converts, writes Steve Lodge

Small savers with the Nationwide might be well advised to top up their accounts tomorrow to increase any windfall payouts that could be announced as early as the end of the week.

The Nationwide said last week that if the elections to its board - the results are announced on Thursday - go in favour of those wanting it to pay a windfall then it would have to "listen to what has been said" and probably look for a buyer for the society. In the elections to the society's board of directors, five windfall-seekers - led by self-styled "carpetbagger- in-chief" Michael Hardern - are challenging the society's own five candidates, who support its public stance of remaining a mutual and attempting to offer better saving and borrowing rates.

The unusually large number of savers and borrowers who have voted - more than a million as of last week - suggests that those wanting the money, which could average pounds 2,000 a head, will win. Voting forms, which have been sent to the society's 3.5 million savers and borrowers, need to be returned by post by 11am on Tuesday.

Assuming the vote does force the Nationwide to convert, it is possible that a cut-off date for qualifying for the windfall will be set for later this week. Unless you are already a customer it is not possible to simply walk into a branch and open an account (although there are waiting lists for new customers). But if you have an account, topping it up could mean a bigger windfall.

The Nationwide says that cheques paid in on Monday would be treated as "money in the bank" on Monday in any windfall calculation, even though the cheques would not clear until Friday. But some savers may be tempted to top up accounts with cash to be absolutely certain they are immediately credited.

If you are a mortgage borrower with no savings account you should open one, because most windfall distributions to date have given two payouts to people who are both borrowers and savers. With people who are just savers, having more accounts has not so far yielded more of a windfall than if all the money was in one account. However, payouts that recognise a "broader relationship" should not be ruled out, so some savers might be tempted to use top-up money to open a new account.

But whether or not the Nationwide produces a windfall this time around, speculation of further windfalls - from societies as well as mutual life insurers - is certain to continue. A Bath-based financial adviser, Chartwell Investment Management, has just published "The Carpetbagger's Guide to Life Companies", giving details of how best to place your bets for insurance windfalls. The tips in our table are taken from the guide, which costs pounds 5 from the firm.

Recent speculation has focused on NPI, Scottish Provident and Friends Provident. To bag these and other insurers, Chartwell recommends what are called "with-profits" investments. Past windfalls and the underlying ownership rules of mutual insurers suggest these are almost certain to benefit from any windfalls and to be favoured in the payouts compared with any other beneficiaries. You also stand to get an investment return on your money - with the catch that you may need to stay invested for five years or more to get best value.

With-profits investments offer a steady year-on-year return indirectly related to the performance of the stock market. This "gradual growth" approach may even seem attractive given that the stock market itself may be heading for a fall. If it does fall, with-profits investors will still be due a bonus while normal investors would take the loss.

There are downsides, however. Charges can be high, particularly on savings plans and especially savings plans that are not maintained to maturity - typically 10 or more years. With-profits bonds are normally better value, but the minimum investments can be significant and in most cases you will be penalised unless you stay invested for five years or more. Assuming the windfall does happen, it may not amount to more than pounds 1,000 for people with the minimum investments in the bonds.

Investors need to remember that the investment return and potential windfall may amount to less than they could get by putting their money elsewhere.

Chartwell offers to improve the deal by refunding commission in return for a fee. Most of the bonds pay commission of 5 per cent or more of the value of an investment (those in the table that don't pay commission have phone numbers for buying direct). Chartwell will refund this for a fee of pounds 30 per investment.

q Contact: Chartwell Investment Management, 01225 446556.

THE NEXT GENERATION OF WINDFALLS?

Life insurer How to place a bet

Friends Provident* pounds 3,000 in Capital Investment Bond (with-profit fund)

NPI* pounds 2,000 in Balanced Bond (put maximum 60 per cent in with-profit fund)

Scottish Provident* pounds 3,000 in With-Profits Bond (put all money in with- profit fund)

Wesleyan, 0800 281472 pounds 2,000 in Guaranteed Growth Bond

Equitable Life pounds 500 in With-Profits Bond

01296 385200

Scottish Widows* pounds 5,000 in With-Profits Bond

Royal Liver Assurance pounds 1,000 in With-Profits Bond

0151 236 1451

Scottish Life* pounds 25 a month into with-profit savings plan

Standard Life* pounds 20 a month into unitised with-profit savings plan

*Products without phone numbers are best bought through IFAs offering discounts. Source: Chartwell Investment Management, 01225 446556.