Don't let a windfall hang in the balance

The fruit is about to fall from the trees for thousands of savers and borrowers. Steve Lodge shows how to ensure that you get the maximum amount

It Is Time for millions of savers with the Halifax and Woolwich building societies to check their balances to ensure they do not inadvertently reduce their entitlements to free shares.

Shares worth up to pounds 4,000 could be at stake for some savers who do not top up their accounts by next month. Those affected are people who had pounds 1,000 or more of savings with the societies at earlier qualifying dates.

Both the Halifax and Woolwich are giving basic handouts of free shares worth perhaps pounds 840 each to nearly 9 million and 2.5 million of their customers, respectively. Halifax's handout date is likely to be in June, Woolwich's in July. But savers with more than pounds 1,000 are entitled to additional shares.

With the Halifax the number of extra shares depends on the lower of your balances on 24 February this year and 25 November 1994, when the Halifax announced its intention to become a bank.

The number of extra shares for Woolwich savers depends on the lower of their balances on 11 February this year and 31 December 1995. In each case the total balance across all qualifying accounts is what matters, rather than the balance in each account.

Many of the savers with pounds 1,000 or more in their accounts previously will now have savings amounting to much more than their earlier balance, so they do not need to worry. But some may have run down their savings, perhaps to pay for Christmas. If your balance is lower than that on the earlier qualifying date, you stand to benefit by topping up your account.

The extra handout from the Halifax is worth another pounds 4 for every pounds 50 of qualifying balance over pounds 1,000. Someone with pounds 5,000 of savings could end up with shares worth pounds 1,200 in total - an extra windfall of pounds 300. The maximum handout of shares to Halifax savers could be worth pounds 5,000 for those with qualifying balances of pounds 50,000 or more.

A pounds 5,000 saver with the Woolwich might also end up with free shares worth pounds 1,200. Its maximum payout to savers could be closer to pounds 4,500 for people with balances of more than pounds 50,000.

In each case mortgage borrowers are also entitled to the basic handout of free shares; this is on top of whatever they might get as savers.

The Halifax reckons more than 4 million of its savers should get extra shares. After the February qualifying dates - the dates of the meetings when the votes to become banks are expected to go through - savers should be able to reduce their balances without affecting eligibility. But in each case you must continue to keep a qualifying account open (with whatever minimum balance is set for that account) until the handout dates.

Likewise, Alliance & Leicester savers, who have already passed the vote for the society to become a bank, can now run down their balances if they want while awaiting their free shares in April or May. All A&L savers are due the same handout, shares likely to be worth around pounds 1,000.

Having said this, it could be in the interests of savers, and particularly those with the Alliance & Leicester and Woolwich, not to reduce their balances until they get their shares; either society could conceivably face a takeover bid before. Any predator would have to offer a better deal overall and the offer might be skewed to those savers who had kept up their balances.

With the Bristol & West and Northern Rock, the two other societies due to pay windfalls this year, wait and see. You should probably keep at least pounds 100 in qualifying accounts. Bristol & West has said it will pay bigger windfalls to some savers based on the lower of their balances on certain dates, at least one of which has yet to be announced. But savers do not know whether they will be given the opportunity to top up their accounts. The date could be retrospective and savers might risk reducing their entitlement by taking money out now. Details of the extra handouts will be published next month or in March.

Northern Rock has not yet said whether it will pay more to bigger savers or follow the Alliance & Leicester in giving the same to everyone. Details should be published this spring.

Halifax, Woolwich, Bristol & West and Northern Rock all required savers to have at least pounds 100 in qualifying accounts on 31 December, 1996 to share in their handouts. Thousands of savers may have already missed out on windfalls by missing this deadline. Thousands more are risking losing out because they have lost touch with their society. If you think you might qualify but have not heard from your society, make contact now.

q Contacts: Halifax 0800 88 88 44; Woolwich 0345 022 033; Bristol & West 0800 88 66 33; Northern Rock 0345 44 88 66; Alliance & Leicester 0990 785163.

q Some Northern Rock savers are putting pressure on the society to pay better interest rates in the run-up to the free share handout, complaining that the society is being unfair because it knows savers are unlikely to withdraw their money in the meantime. A free information leaflet is available from Dr S Wozniak, 304 Uttoxeter Road, Mickleover, Derby DE3 5AG. Send an SAE.