Happy New Year for Eq­ui­table Life savers

20 years on, £9,000 pen­sion boost for pol­i­cy­hold­ers draws line un­der de­ba­cle

Daily Mail - - News - By Ruth Sun­der­land Busi­ness Edi­tor

THOU­SANDS of Eq­ui­table Life pol­i­cy­hold­ers will start 2020 with a cel­e­bra­tion as the value of their pen­sion pots will rise by around 70 per cent on New Year’s Day.

The one-off boost will give savers who have ‘with-prof­its’ plans an aver­age ex­tra pay­out of more than £9,000.

It is part of a scheme aimed at fi­nally re­solv­ing the Eq­ui­table Life de­ba­cle – which ru­ined the re­tire­ment plans of a mil­lion mid­dle class savers – af­ter al­most two decades.

The near col­lapse of the world’s old­est mu­tual in­surer in 2000 re­mains one of Bri­tain’s worst fi­nan­cial scan­dals.

Thou­sands were hit, in­clud­ing former Bond girl Honor Black­man, who has said that nearly half of her pen­sion went ‘down the drain’.

Si­mon Small, Eq­ui­table’s chief ex­ec­u­tive, has now de­vised a plan un­der which the com­pany name will dis­ap­pear af­ter more than 250 years.

The busi­ness will be taken over by a new owner, Ut­most Life & Pen­sions, for­merly known as Re­liance Life. It is part of an in­vest­ment group that man­ages £33bil­lion of funds for more than 240,000 cus­tomers.

A vote on the pro­pos­als was passed at an ex­tra­or­di­nary meet­ing in Novem­ber.

Eq­ui­table still has around 126,000 pol­i­cy­hold­ers who have ‘with-profit’ plans and were were in­vited to vote on the plan. A typ­i­cal saver has a pot worth around £14,000 and will see around £9,500 added on Jan­uary 1, tak­ing the to­tal value to £23,500.

In re­turn for the pay­outs, they must agree to give up guar­an­tees. Their sav­ings will be switched to ‘unit-linked’ plans which go up and down in line with the value of the in­vest­ments.

Savers will be in­formed by let­ter of the ex­act new value of their poli­cies by the end of Jan­uary. The with-profit poli­cies that det­o­nated the prob­lems at Eq­ui­table were sup­posed to smooth out the ups and downs of the stock mar­ket by adding guar­an­teed bonuses to savers’ nest eggs each year.

How­ever, Eq­ui­table mis­cal­cu­lated and found it­self un­able to hon­our the prom­ises it had made. It was forced to close its doors to new busi­ness in 2000 with a £1bil­lion­plus black hole in its fi­nances.

The then Labour gov­ern­ment re­fused to pay com­pen­sa­tion to pol­i­cy­hold­ers for many years, de­spite ev­i­dence that City reg­u­la­tors had failed to su­per­vise the firm ad­e­quately.

A re­port from the Par­lia­men­tary

Om­buds­man in 2008, called ‘A Decade of Reg­u­la­tory Fail­ure’, set out the short­com­ings in un­spar­ing de­tail over around three thou­sand pages.

Un­der former chan­cel­lor Ge­orge Os­borne more than £1.5bil­lion was paid out. But savers still suf­fered years of anx­i­ety and many died be­fore re­ceiv­ing a penny.

The Jan­uary 1 pay­outs will fi­nally draw un­der a line un­der the disas­ter.

Mr Small said: ‘ There is a sense of quiet pride. Most of the staff were here when Eq­ui­table closed and so they are con­scious that pol­i­cy­hold­ers re­ally suf­fered and went through a lot of anx­i­ety.

‘This is a great out­come for pol­i­cy­hold­ers.’

Vic­tim: Honor Black­man

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