An eleventh-hour bid to encourage Equitable Life with-profit annuitants to vote in favour of transferring their policies to Prudential will do little to quell scepticism over the move.
That is according to a source at the Equitable Life Trapped Annuitants (ELTA) action group, who has seen documents the firm is sending out to policyholders today.
The documents include ‘Key Features’ of the transfer, FAQs and a Policyholder Circular, all fronted with a letter encouraging policyholders to vote at the firm’s Extraordinary General Meeting (EGM) on 26 October.
The letter states: 'Your Board unanimously recommends that you vote FOR the resolution.'
But a spokesman for the ELTA, set up to represent the with-profit annuitants at Equitable Life, says there is little the firm can do to put a positive spin on the proposed move.
“I just don’t know how anyone can come to a reasonable conclusion over this and say: ‘Yeah, this is a good deal for us’,” he says.
“There is an attraction to leaving Equitable Life behind us but there is always that feeling: ‘Are we jumping out of the frying pan and into the fire?’”
The spokesman says one of the biggest concerns over the move is that policyholders haven’t been able to afford for an independent actuary of their choice to run the rule over the benefits of the transfer.
Equitable Life points out the proposal has been reviewed by an independent expert, S J Sarjant FIA, a consulting actuary with Watson Wyatt, adding his appointment was approved by the FSA.
But the ELTA says: “A judgement is being made by an actuary who has been chosen by Equitable Life.
“We can not afford to pay for our own independent actuary to look at whether this is likely to be a good deal for us or not. Effectively, we are relying on them.”
The spokesman adds another gripe is the lack of a ‘grandfather clause’ in the proposed deal.
He says any bonus rates policyholders would have accrued by being with the Pru over the same amount of time they have been with Equitable Life will not be carried over.
“Maybe that’s not a reasonable expectation,” he says. “But it is important when we are being told we’re going to be better off.”
Equitable Life says the transfer, should policyholders give it the green light, will not only benefit those annuitants being transferred to Prudential, but also those remaining at Equitable Life with other policies.
The letter to policyholders states: “We unanimously recommend that you vote for the resolution because the Prudential will put your with-profits annuity policy(ies) into an actively managed fund which is one of the largest and strongest in the UK and which has greater bonus earning potential than the current Equitable Life fund, although increases to bonuses are not guaranteed.”
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