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Why is PMAS failing?

Investment | Life Helpful? 20

Asked by DaveK, submitted 05 June 2010.

Open Quote I'm disgusted by a ten year PMAS endowment maturity value: £14,042 in, £12,600 out, I intend to visit their office at Lichfield.

I'd be grateful for advice on what questions to ask, maybe you could add to this list.
- What total remuneration did Graham Berville receive during his 7 year tenure?
- Why did a Mutual Assurance Society require a CEO,and since his departure seems no requirement for a replacement?
- Why did PMAS become a Limited Company?
- Why has PMAS bought Roland Smith Ins Brokers& become involved in mortgages with Anglo Irish Bank & Bristol&West BS?
- Should the owners(Members)of a Mutual Assurance Society be informed of proposed change of business ventures/ identity/philosophy?
- Now a Ltd Co,who are the officers-shareholders?
- Are there trustees appointed to look after the interests of policyholders/investors?
- Why did PMAS extend the office premises to include conference and training facilities at Lichfield(hardly the centre of excellence for such activities),and what was the cost?
- Has income, and profits, from existing investors been used to 'shore up' losses in the new ventures?

Over the past ten years:
- What returns are you paying on maturing endowment policies?
- How much is the shortfall compared to premiums paid?
- PMAS was a small outfit providing life/endowment insurance for members of the Police service 'family'.
- Endowment policies I had years ago paid maturity values three times the sum assured.

Had I known it's misdirection and involvement in affairs beyond it's remit I would not have transacted further business.

My meeting won't increase my chances of gaining a better settlement, but at least the faceless ones will meet at least one of their disgruntled customers.
End Quote

Answered by Justin on 07 June 2010

I can understand you being upset at such dismal investment performance and hats off to you for planning to visit and challenge the Police Mutual Assurance Society (PMAS) in person.

The PMAS website is full of marketing gloss designed to attract new customers, but offers no readily accessible information (that I can find) about how it actually invests its customer’s money – which to me seems a pretty fundamental point. I’d certainly ask PMAS why it doesn’t prominently display information about its with-profits fund on the site, including bonus rates, underlying fund performance and asset allocation.

The best source of information I’ve found is its 2009 annual report, available here. It also contains quite a lot of background information you might help helpful (it answers some of your questions too).

I think it’s telling that the report contains lots of glossy charts and figures intended to demonstrate how well PMAS is looking after its customers, yet none are related to investment performance which, let’s face it, is really the only thing that matters to those with PMAS savings and investment policies.

I’m concerned that PMAS continues to peddle endowment policies when conventional wisdom says they’re seldom a good deal for customers (as you’ve found out to your cost). The PMAS key features document for its regular savings plan (endowment) shows that costs on a plan with a £5 weekly contribution could reduce a 5% annual return to just 2.5%, and that’s excluding the cost of life cover. It’s not hard to see why it’s so difficult to make money with one of these policies, yet PMAS sold 10,000 new regular savings plans last year - shocking!

The underlying with-profits fund returned 7.2% last year and lost 9.4% in 2008. As of 31 December 2009 the fund held around 56% in fixed interest with the balance in stockmarkets.

Unfortunately, market timing doesn’t appear to be PMAS’s forte, it moved around £100 million from fixed interest into stockmarkets towards the end of last year, so the recent market falls will have especially hurt.

I’d encourage you to raise the above points at your meeting. Other questions you might ask include:

Total director remuneration last year was £915,424 – are policyholders really getting value for money?

The directors benefit from a bonus scheme. What factors affect the levels of bonus directors receive? And is investment performance included?

PMAS accounts show a £1.7 million charge for investment management expenses. Ask for a breakdown on how the money is spent.

PMAS spent £197,000 on auditor fees last year; did they shop around to ensure value for money?

Good luck and please let us know how your meeting goes.

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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Readers' Comments (11) - To post a comment please register or login .

Comment by DaveK at 2:28pm on 10 Jun 2010:

Thanks for your reply. Certainly gives me some more weight for when I see the man. Still baffled how a Mutual Assurance Society owned by the members became a Limited Company.
Your information re ten thousand new policies last year indicates returns beyond the dreams of avarice. Even small policies- say £1,000 a year in premiums for twenty years for each policyholder. When they discover the returns are derisable, the salesmen who sold them will have long departed. I'm still in foreign climes but my son text to say that there is an article in Daily Mail 9th June which refers to problems with 'zombie investments'. Havn't yet seen it but may add some info.

Comment by lawrenceb at 10:17pm on 22 Jun 2010:

my advice would be to ignore all of this and check out my user review of PMAS in the user reviews section - cant comment on davek experiences but would suggest there are many many more happy customers than daveK or Justin realise - this is all missing the point of PMAS - have also asked Justin some more and different PMAS questions........

Comment by DanTheMan at 8:30pm on 25 Jun 2010:

The PMAS are exclusively for police officers, police civilians and their family members - it is an exclusive club. A billion pound business no less.

The web show them as one of the leading providers of endowment products in the whole market. Take note of that point which alone indicates that there is something special about this company.

They have provided policies for my family for many years, small endowment policies from just £2 a week.
They are exclusive in that their policies are taken straight from my salary as all Chief Constables in the uk support & believe in them.
Their costs (FSA website) being the cheapest in the industry.
The Customer Satisfaction Survey show them as leaders in nearly every category.
Is there any other company that offers all this - i think not.

They provide guarantees that are cast iron for small sums of money.

They are trustworthy and reliable & have provided for my family throughout my career.

My little policies have provided for holidays, cars & home improvements - all for a couple of quid a week.

Their President is none other than Her Majesties Chief Inspector of Constabulary - a man who has the Home Secretary & the PM on speed dial.

Every policy i have taken out shows BEFORE I PAY A PENNY what the guaranteed return is. That return is ALWAYS higher than what is put in.

The complainer states he got back less than he put in - IF that is the case he must have been told that at the start of the policy & chose to go with it. I suspect that he must have personal issues (health/age etc) that necessitated a lower return - he would have known this.

Whilst this complainer & your reply are disparaging, they are also inaccurate & not reflective of the vast majority of the uk police force.

Membership is regarded as a huge perk & bonus for being in the cops.

I consider myself very lucky to have access to such an exclusive and successful organisation.


Comment by comben at 8:25pm on 21 Jul 2010:

I have to disagree with the original comment and support in particular comments by DanTheMan. I have saved with PMAS for over 25 years. Last year I had 4 endowment policies mature to cover a mortgage. 2 with PMAS and 2 with other well known companies. PMAS policy for 25k paid 26k, policy for 1.5K paid 1.6K. One for 20K with Standard Life paid 13K and one for 17k with Royal and Sun Alliance paid 11K. I know where I wish I'd invested these. The savings plans I take out each year as a 10 year policy pay for our family holiday every summer and the money is deducted from wages so what I dont see I dont miss. All these policies guarentee at least your investment back - your original poster must have declared something which affected his/her potential payout. Yes the directors get a good salary and bonus but they would wherever they worked, this is normal financial institution practice. Though it is an exclusive club many of their products are available to ALL members of society, such as house and car insurance and child trust funds. Their costs are low as they dont pay sales persons it is all done internally by volunteers who get no pay. The fact you can invest amounts as low as £2 a week means even those with little cash to spare can put somethiung away for a rainy day. Looking forward to retirement in a few years and regular annual payouts

Comment by DaveK at 5:20pm on 30 Jul 2010:

I attended at PMAS Headquarters on 26th July, as previously notified. My questions were not answered - very guarded atmosphere and I have left the list of questions including yours, with the director requesting a written response within 14 days. Director couldn't remember how much bonus and total renumeration he received last year. Maybe it will be detailed in his reply. It seems that the friendly society Police Mutual Assurance now bears little resemblance to the organisation of yesteryear and exists in name only in order to attract brand loyality income from clients who continue to believe it's the old firm.

The new outfit is PMAS Limited, a marketing group of various limited companies dealing in everything financial from Pensions to Insurance Brokerage. I asked why they had diversified into these other activities and was informed that government restrictions on what a friendly society could do directed the move.

I asked how did one become a director of PMAS and was informed that the post would be advertised in the financial world media.

The question What is an affinity friendly society? was answered by referring to its close association with the FSA with whom they provide joint financial training seminars.The FSA do not promote their products, just share the platform whilst representatives of PMAS Limited do so.

The director turned up twenty five minutes late. At least he didn't sit high up behind a big desk and invite me to sit on a low chair ten feet away.

I'll report further when they reply-or inform you if they don't.

Comment by SammyT at 10:39pm on 03 Aug 2010:

PMAS has always done the job for me and my family but in many cases they did too much and created an expectation they couldnt keep going - my canteen always had the old timer who loved the pmas whilst his returns were good but suddenly had lots of issues with management once he got something he didnt like! impressed to see this website has replaced the canteen! the pmas wont set the world on fire but you can sleep easy knowing your money is safe.

Comment by DaveK at 8:55pm on 26 Aug 2010:

The Director has replied but not answered many questions. He did state that age and previous medical history would have a bearing on the maturity shortfall. This, despite requiring higher premiums for the first five years to cover the increased risk.
PMAS still exists but changed since the 1922 organisation and later in the 1970's.(To reflect the changing needs of members etc).
He doesn't agree with comments here and noted that some postings of mine were subject to moderation by the website. He did not mention that the posts were not rejected but published as a comment to previous postings.
An 'Affinity' Friendly Society is one which attends the needs of a particular group pf people. (Not the impression I gained that it was their 'affinity' with the FSA)..
They did not clearly publish the charges to be made on my policy but the documents issued at the time complied with the law.
The question re the £1.7 million charge for investment managemement expenses was answered by stating it was split between custodian charges, fund management charges,professional fees and direct and apportioned costs. I read that as, "No Comment".
During the past five years they have received 937 complaints re maturing policies which is less than 0.5%. I read that as an average of one complaint each working day.
A copy of the 2009 report was included which was stated to contain answers to many of the questions. Havn't yet found the bit which explains how the directors'' bonus scheme is funded and why there's little in the pot for policyholders.
His letter finishes by providing the address of the Financial Services Ombudsman. I want to be fully informed before I go there so there's more research to be done yet.
It seems clear that the directors are cleaning up based on the number of policies sold, not on investment returns.
And since this was raised on Candid Money I'm suspicious of those posts giving the outfit a five star rating...-but I'm just a cynical old detective.

Comment by daveball at 8:30pm on 11 Mar 2011:

I took out a Low cost Endowment policy with the PMAS in 1986 after being taken in by the sales pitch in the Literature they provided believing that my monthly premium paid in for 25 years would not only pay off my £20,600 mortgage but would leave a nice little cash surplus on Maturity... how wrong was policy will mature next month at only £16,200...I have realised that as far as investing in its members money goes they are extremely poor,with the past few years showing virtually no growth whatsoever,this despite still paying in £28 per month premiums..I have contacted PMAS today and been told that they are paying out a paltry 2% Terminal bonus on my 25 year policy.
Just what are they doing with our money?...well one of the threads on here explains why....I thought I was part of the 'Police family'...but wished I,d DIVORCED them a long time ago!...the worst decision of my life putting thousands into their 'coffers'....I cant be the only one out there who feels this way...felling very disgruntled...but feel I have a right to be after all they forgot to mention to me at the start that the Policy could/would fail...they just explained that only '80% of current bonuses were required to pay off the loan...there still doing it now with their 'glossy posters' in the stations...the only plus point for their savings policies is that it comes out of your wages..hardly a sound financial choice! for me I wouldnt put a single penny their way again...I just wish I could turn the clock back..Dave B..

Comment by lisah at 12:59pm on 30 Mar 2011:

I head the Police Mutual Group Business Improvements team here at PMAS, and I was very sorry to hear that your recent experience with the Society has left you feeling this way. I have looked into your case and am sending you a formal response to the issues you have raised. In the meantime, however, if you would like to talk this through with me, please call me back and I will be happy to take your call.
Kind regards
Lisa Harwood

Comment by TheMonty at 7:33pm on 13 May 2011:

Just had a 10 year Moneyspinner mature.
Despite the dreadful investment markets of the last 10 years ive made a 20% profit.
Guarantee £2613
Payout £3136.15
Now that is a quality product!

Comment by daveball at 9:27pm on 24 May 2011:

Dont want to sound too disgruntled,bitter or twisted but as per my previous post I took out three Endowment policies with PMAS to cover my INTEREST ONLY mortgage of £50, was PMAS who said that the policies were 'designed' to pay off the mortgage and have a cash surplus also...unfortunately being financially naive at the time I like many others, was taken in by the sales 'pitch'...because we believed we were part of the 'special' Police family...either way when 2014 comes around and I have to pay off the 50k..guess what?..I,ll have to find £15,000 to make up the shortfall...I dont recall PMAS explaining this might the end of the day they are just another company trying to make money out of people ..however they are just a very small fish in a big financial 'pond' and thus cant/dont generate good performance figures in terms of bonuses...I was unaware re the financial renumeration handed out to the 'resigning' chief exec...what a the way, I too have taken out numerous 10 yr moneyspinners since joining in first they did pay out handsomely but peetered out in recent years..Yes,they are great for paying for holidays and the like..but my advice is not to use PMAS with respect to investments...unless that is, your happy to line the pockets of people you never meet or pay for fancy business premises!!!
Anyway cant turn back the clock unfortunately,just have to take it on the chin as the worst decision I ever made taking out endowments with PMAS.