By Ruth Alexander Equitable Life pension plan holders can transfer their with-profit fund to ...
By Ruth Alexander
Equitable Life pension plan holders can transfer their with-profit fund to another provider without attracting the 15% financial adjustment if they use a phased income drawdown scheme, according to IFA group Chartwell.
Equitable Life has said it will apply a 15% financial adjustment if someone in a drawdown policy wants to transfer the plan to another provider as the group sees this as an early surrender of the fund.
However, according to Chartwell, those Equitable members who are not in drawdown and taking benefits, have not purchased an annuity and are past the age of 50, can transfer the policy to another provider without the 15% charge.
Stephen Brady, a retirement specialist at Chartwell, said following recent changes in Inland Revenue rules, drawdown policies can now be transferred.
Anyone who has a personal pension and is aged between 50 and 75 has a legal right to take their pension benefits, whether that be in the form of an open market option, an annuity, an income drawdown scheme or a phased income drawdown scheme, he added.
Brady said: "Phased income drawdown schemes are a good option for people who are retiring young Ã people who are in their mid-50s, perhaps Ã who need only a supplementary income at the moment from their pension pot.
"These are the sort of people who might go from being full-salaried to doing just a couple of days work a week, for example."
Instead of taking maximum benefits from the pension fund, including full allowable tax free cash, segments of the pension can be called upon to provide lower amounts of income, leaving the bulk of the plan untouched to continue capital growth, Brady said.
Meanwhile, Equitable Life is making progress with the detail of a compromise scheme for some of its policyholders, which is likely to offer some form of immediate fund value uplift to policyholders with guaranteed annuity rate policies in exchange for the waiving of these guarantees.
If agreed it is intended that this will stabilise the Society, produce an additional payment from Halifax of up to £500m and allow investment freedom to be restored, leading to the prospect of stronger investment returns in the future.
The outline of the scheme should be with policyholders by the summer, with voting by policyholders on the final scheme taking place later in the year.
The group, which has appointed six new non-executive directors, has recently recruited the solicitors Herbert Smith to investigate whether there are any grounds for making claims against former directors, advisers or others who were involved with events which lead to the closure of the Society to new business and, if so, whether there is any realistic prospect of redress.
Herbert Smith will have free access to the Society's records, and the solicitor's conclusions will be published. In addition, PriceWaterhouseCoopers will be proposed as the Society's new auditors at the AGM on May 23, replacing Ernst & Young, the current auditors. The Society has appointed Peter Nowell of Deloitte's Insurance practice as appointed actuary. Nowell was previously group chief actuary of Prudential.
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