Equitable Life

Tim_C

Like many my eyes glaze over at the very mention of pensions. However I was in a 40/60ths scheme with my employer for over 20 years until 1998. There was a management buyout in 1996 and two years later the management buyout team full of apologies, said that they could not afford to fund their part of the pension scheme.

Result - my part of the fund, just over £100,000, was transferred to a deferred annuity account within Equitable Life. Then the proverbial you know what hit the fan and the court case became public ect etc.

Since then its like I don't exist. I have colleagues who feel the same way. All of us could build an extra room on our house to store the countless reports and booklets that EL keep sending out. But they never tell us what our part of the fund is worth today or offer advice.

In addition nobody wants to give advice on the best thing to do. Do I leave it where it is or lose 20% if I move it? If I move it where do I move it to?

It is a nightmare and as I am approaching 49 I need some good sound advice. Has anyone out there been in a similar situation with EL and if so what did you do or what do you recommend?

Simple English please the terminology drives me crazy just like mortgages.

Thanks.

EdInvestor

Hello TimC

What type of policy do you have with Equitable?

Is it something called a "Section 32 buyout bond"?

Does it have something called a "GMP" ( Guaranteed Minimum Pension) mentioned on your documents?

Tim_C

I don't have the policy at work with me but it was always described as an employers final salary scheme retiring on a 2/3rds final salary.

When my employer stopped contributing and closed the fund, they asked everyone to start a private pension and most of us did. We were given the choice of transferring our portion of the fund from the old pension across but nobody did. Most people were advised that we should sit tight and wait for someone to buy up Equitable when we were advised we would all get a Pensions windfall.

What can I say, rubbish!

My part of the fund is currently sitting in what Equitable describe as a Deferred Annuity Account.

I don't recall annything about a Section 32 but GMP does ring a bell with me because we were guaranteed 2/3rds of our final salary.

cheerfulcat

Hi, Tim,

You might be interested in the Equitable Life discussion board at the Motley Fool ( link ), where there are many people in a similar position.

EdInvestor

GMP relates to being contracted out of the state second pension/SERPS. When a final salary scheme fund gets transferred over to a life company in a Section 32 contract, the life company must agree to pay that GMP.

It should be expressed as a pension amount p.a. which you would get as a lifetime pension from your retirement date.

Do you know how much the GMP is and how much your fund is worth? Is your fund invested in the Equitable With profits fund?

Because both your fund value and annuity rates have fallen so much, it is possible ( indeed probable) that Equitable will make a loss on your contract, ie it would cost you more to buy the GMP income through an open market annuity than your fund is worth.

If so, just leave it alone as Equitable will have to make up the missing money and pay you the guaranteed minimum when you retire.

Of course you may have some other type of pension entirely.You really need to post some details before we can comment properly.

rbulph

cheerfulcat wrote:

Hi, Tim,

You might be interested in the Equitable Life discussion board at the Motley Fool ( link ), where there are many people in a similar position.

Most of the posts there seem to be off-topic.

Tim_C

A bit more infomation in reply to the questions asked yesterday.

The policy was a Final Salary Policy 2/3rds Final Salary

It is not a Section 32 Buyout Bond

It does have GMP

My part of the fund before it was closed is currently being held in what they describe as a Deferred Annuity Account.

Hope this helps.

EdInvestor

Not really I'm afraid, see my queries above.

This sounds like a bulk-bought annuity.Such an annuity would pay you a stated amount of pension when you retire, equivalent to what you would have got in the final salary scheme.

Is it one of those?

Do I leave it where it is or lose 20% if I move it? If I move it where do I move it to?

Are you sure you can move it? Why would you want to move it anyway?Your pension would not have been affected by the events at Equitable over the last few years.

If it is a bulk bought annuity, then you would never have been eligible for a windfall because you are not a member of the WP fund. AFAIK, the worst that could happen to you is that your pension at retirement might be reduced by 10%.

But Equitable would have to go into administration for that.It's more likely to be bought by some other company in due course I'd have thought.