Key vote offers boost to Equitable victims
End in sight after 20-year battle with pension giant
THE Equitable Life disaster is approaching a resolution after two decades that will offer longsuffering pension savers a oneoff boost to their policies.
The near collapse of Equitable Life in 2000 is one of Britain’s biggest financial scandals.
Since then, thousands of victims, including former Bond girl Honor Blackman (pictured), have faced a bruising fight for compensation – and many have died before receiving redress.
At the time of its downfall, Equitable was the country’s largest mutual life insurance company and had an impeccable reputation for low charges and high returns.
But, disastrously, it had been giving guarantees to pension savers that it could not afford to honour. It was forced to close its doors to new customers and went to the brink of insolvency.
Under the scheme drawn up by chief executive Simon Small, the Equitable Life name will disappear after more than 250 years of trading and all business will be transferred to a new owner, Utmost Life & Pensions.
A vote on the proposal will be held at an extraordinary general meeting on November 1, and if passed then savers who have ‘with-profits’ plans will be given a large uplift to the value of their pensions, typically of around 68pc, with the average payout reaching more than £9,000.
In return they have to agree to give up investment guarantees promising to keep their returns up to a set level.
‘With-profits’ policies are savings schemes where bonuses are added each year and cannot subsequently be taken away. These can cause problems for insurance companies if markets move against them and they are compelled to make payments to customers they can no longer afford.
Equitable Life is writing to 164,000 individual policyholders asking them to approve the plan. There are about 300,000 policyholders in total, some of whom have invested through group schemes.
Utmost Life & Pensions, formerly known as Reliance Life, is part of an investment group that manages £33bn of investment for more than 240,000 customers.
Under the proposals, Equitable’s with-profits policyholders will switch to ‘unit-linked’ savings, which go up and down in line with the value of investments and do not have any guarantees attached.
For the plan to go ahead, 50pc of those who vote must approve it, along with 75pc by value. The deadline for postal and online votes is 10am on October 30 but savers can vote in person at the EGM on November 1. If the vote is passed, the transfer will take place in January. Large packs of documentation are landing on savers’ doorsteps shortly.
Simon Small said: ‘The board believes that the proposal is the best way of securing the future for our policyholders.
‘That said, it is important that everyone makes up their own mind, so I encourage you to have your say and vote accordingly.’
Equitable will be providing a helpline and subsidised independent financial advice along with personal illustrations of what the proposal will mean for individual savers.