Meeting Equitable Life's guaranteed annuity responsibilities has led to a 5% reduction in general ...
Meeting Equitable Life's guaranteed annuity responsibilities has led to a 5% reduction in general pension policy values and a 4.5% reduction in life policy values.
The losses were highlighted in a report conducted by B&W Deloitte into whether certain categories of former non-GAR policyholders are financially disadvantaged because of the group's GAR problems, in that policies were missold to them.
In response to the report, Equitable Life is to examine a compromise scheme for eligible former policyholders to end the outstanding GAR problem. The study covered policyholders who left the mutual between 20 July 2000 and 8 February 2002, following the House of Lords judgment and before the compromise scheme's effective date.
It reviewed the impact of GAR costs on policyholders that held regular and single premium pension policies, with-profit endowments or bonds, whose policies were either surrendered or matured during that period.
The report, published last week, found returns from Equitable Life pension products prior to July 2001, when the mutual reduced policy values, and with-profits bonds before 2000, were broadly in line with, and sometimes higher than, those of comparable insurers' products.
However, payouts from Equitable Life's pension policies were lower than returns from the insurer's comparable products over the reviewed period.
It also found that following the House of Lords ruling in July 2000, GAR costs were incurred as a result of the mutual's decision to remove bonuses that had occurred during the first seven months of the year.
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