When I went to my local branch of Royal Bank of Scotland the cashier was adamant that my old European currencies

When I went to my local branch of Royal Bank of Scotland the cashier was adamant that my old European currencies had first to be translated into sterling before they could then be converted into euros, a peculiar banking perversion known as triangulation.Unlike most customers, I was also in touch with head office about the transaction, and their staff spotted that I had been the victim of an error. Official Royal Bank policy is to convert the old currencies directly into euros, cutting out a stage of buying and selling.The upshot is that I am to collect an extra €16.11, or nearly 10 per cent on the €175 the branch originally paid me.Other banks have different policies, but if you are a Royal Bank customer do not be lured into the expensive pastime known as triangulation.w.kay independent.co.uk William Kay is personal finance editor of ‘The Independent’. As the peak divorce season moves into top gear, a leading actuary warned this week that wives can lose more than half their husband’s pension pot. The true value of a pension is often overlooked.”Spouses should be receiving up to twice their present share of their partner’s occupational pension through divorce settlements, or sometimes even more, because of the pension-sharing provisions of the Welfare Reform and Pension Act 1999. “That law values and apportions an individual’s pension fund on the basis of the cash equivalent transfer value at the time of divorce rather than its eventual value.A 40-year-old woman divorcing a husband earning £60,000 a year who had been in a private-sector final salary pension scheme for 15 years would be credited with £70,000, but the eventual value of her share would be £130,000..

This week’s announcement by Norwich Union that it is cutting bonus rates on with-profits policies follows similar statements from Scottish Widows, Co-operative Insurance and Eagle Star, and many more are almost certain to follow. Pensions and endowment mortgages could be badly affected, and the ability of borrowers to pay their debts. This reduces payouts by more than 10 per cent.Mike Urmston, the chief actuary at Norwich Union, predicts that things will get worse. “Payouts are likely to fall further in the longer term, reflecting anticipated lower investment returns compared to those people enjoyed in the Eighties and Nineties,” he says.Colin Jackson, managing director of Baronworth Investment Services, publisher of a guide to with-profits policies, says: “It’s all bad news so far and it will continue to be bad news. But people should not be panicked.”The only real value of these policies is at the end of their term.

If people took out these policies five or six years ago and surrendered them now, they would get nothing.” He advises people not to react by surrendering policies.If they cannot afford to maintain them they should sell them on the open market through a broker such as his own firm. Alternatively you can make them “paid up”, which means you add no more to them but wait for them to mature.Mr Jackson say that attempting to defer retirement in the hope of achieving higher bonuses is probably futile, as well as impossible for most people. “You will end up now getting a smaller pension, but it won’t get better in the foreseeable future,” he says.The announcements emphasise that any product based on equities will produce smaller returns when the stock market hits trouble, even with- profits, which are designed to even out performance over a number of years.John Turton, life and pensions specialist at the Bestinvest IFA, says: “You can’t expect to make a silk purse out a sow’s ear. The concern that a lot of consumers may have is from a endowment perspective, that they are not going to have enough money to pay for their mortgage. But in a savings plan, where you are amassing money for a later date, you cannot expect to continue making piles and piles and piles of money when we’ve had the stock market we’ve had for the past two years.”Anna Bowes, investor services manager with the Chase de Vere IFA, adds: “These announcements are not unexpected. If investors are in a strong company they are still relatively secure. It makes sense for the companies to reduce annual bonuses.” This will ensure they have sufficient reserves to meet their commitments to customers in future years, she says.Policyholders with endowment mortgages should consider additional savings, to protect themselves against the policy failing to repay the debt Ms Bowes advises against paying off the capital.

She suggests it is better to put the money into a tax-free equity or insurance individual savings account, or directly into stocks. She warns: “The worst thing to do is to hide your head in the sand and pretend this is not going to happen.”Mark Dampier, head of research at Hargreaves Lansdown the IFA and stockbroker, points out that things could get worse yet. “In the 1973/74 recession, a lot of bonuses weren’t paid out at all,” he says. He too believes people whose policies do not mature for several years should not panic.