Scottish Life sale set for approval

Members are expected to approve the deal

Scottish Life policyholders are expected to give their wholehearted backing to the sale of the company on Thursday - triggering windfalls worth thousands of pounds.

The Edinburgh-based pensions group is asking its members to approve a takeover by Royal London.

And two other Scottish firms are likely to follow its lead by going ahead with demutualisation later this year.

The Scottish Life deal needs the permission of 75% of those policyholders who vote.

Scottish Provident is set for demutualisation

If it gets the green light, Royal London will pay out about £1bn to members in compensation.

However, only a small proportion of that amount will be handed out in cash.

The company says most policyholders will benefit through bonuses which will be added to policies.

Only 220,000 members will receive a £500 cheque for the "loss of their membership".

Scottish Life agreed to be taken over by its rival last October in a deal which is expected to earn with-profits policy holders about £4,000 each.

Both companies said branch closures or job cuts would be unlikely.

Windfall payments

The group's headquarters will remain in Colchester, where Royal London is based, while the independent financial advisers business will be located at Scottish Life's headquarters in Edinburgh.

Two other life assurers are also due to demutualise this summer.

Scottish Provident is expected to be sold to the Abbey National in September in a deal which would spark windfall payments for 450,000 of its members.

Voting papers on the proposals were sent out to members of the 164-year-old Edinburgh-based financial services company earlier this month.

Qualifying members who hold with-profits policies will be eligible for a basic windfall of £500.

Additional variable compensation will also be paid to 385,000 members. The amount will depend on the type and size of the policy held.

Public company

The average windfall is likely to be about £3,500, but some members will get more than £100,000.

And Friends Provident is currently balloting members on converting to a public company.

Approval for the move would mean windfall payouts to 1.7 million qualifying members.

About half its members will receive payments of between £450 and £540 in shares, although some could get as much as £3,240.

This would leave Standard Life as the only independent Scottish mutual.

It fought off a move to force it to convert last year - but there is speculation that carpetbaggers will make another attempt in the near future.