Equitable Life with profits pension / takeover.

[Deleted User]

Personally I would vote “for” as long as there are no penalty fees for leaving Reliance

pafpcg

The paperwork for the Equitable Life 2019 AGM in May has been issued (mailing arrived yesterday) and can also be read on the Equitable web-site at
www.equitable.co.uk/financials/annual-general-meeting-%28agm%29

The proposed takeover of the with-profits fund by Utmost(Reliance) is covered in the Chairman's 2019 statement (www.equitable.co.uk/media/61300/chairmans-statement.pdf), but there's little that we didn't already know. The statement about the takeover concludes with this rather curiously-worded paragraph:

The Board considered that Utmost Life and Pensions offered the best deal, while wanting to keep our staff, systems and building as a platform to add future acquisitions. This means that we can provide continuity of service for all policyholders.

I presume that it's Utmost who want to use the facilities at Aylesbury as a platform to add future acquisitions!

The statement refers to options which were rejected out of hand but nothing about any options which were seriously considered, other than the offer from Utmost. I wonder to what extent the preservation of the continued employment of the existing staff was weighted in the selection of offers - I'm sure others on this forum will also have been involved in takeovers where ruthless maximisation of the sales value of a company took absolute precedence over the prospects of employees.

POPPYOSCAR

pafpcg wrote: »

Thanks for your investigation.

So, if the Reliance/Utmost pension-paying arrangements are unacceptable, would you vote against the takeover?

I'm wondering if public speculation, at this stage, might be counter-productive. If something were to be published in, say, the Daily Telegraph or other media likely to be read by large numbers of Equitable Life policy holders, which showed Reliance/Utmost to be restrictive in what they offer, would the proposed takeover then be voted down? Or perhaps there was a recommendation: "vote in favour of the takeover to get the increased pension pot but immediately to transfer your pot to another provider", in which case might Reliance/Utmost panic, reduce their offer or pull-out entirely on the fear of losing too much business?

We don't know what commitments there are already in place between Equitable and Reliance/Utmost which might mitigate such factors (other than that Equitable has insurance in place to cover any fall in the value of the fund's investments - such insurance probably means that Equitable must proceed with the vote within the timescale stipulated in the insurance). However, I would expect that there are some terms in any existing agreement between Equitable and Reliance/Utmost which limit what Equitable can announce and, crucially, give details on what avenues will be available to policy holders to transfer-out to a third-party provider after a takeover is agreed, ie "take the money and run!"

My partner has a with-profits policy with Equitable Life which if the takeover goes ahead might increase in value by several tens of thousands; so, we're going to be try to be patient until the final offer is published and then seek advice and debate our options - switch to Reliance/Utmost for a few more years, buy an annuity immediately, transfer funds to her SIPP or some other option. For those needing their pension funds this year, it must be highly frustrating.

It would be a question for me of weighing up the extra monetary value against what I could actually do/not do in the future and any penalties involved etc. which might make the enhancement a paper value only, if you see what I mean.

So yes, if that were the case I might vote against it.

pafpcg

POPPYOSCAR wrote: »

It would be a question for me of weighing up the extra monetary value against what I could actually do/not do in the future and any penalties involved etc. which might make the enhancement a paper value only, if you see what I mean.

The Chairman's Statement includes this promise:

I fully understand that you will want to consider your own circumstances and weigh up the pros and cons of the proposal before deciding how to vote and what fund to invest in. This is why we will be offering guidance and subsidised advice through an independent service provider, as well as a personalised illustration of what the proposal could mean to you.

By "subsidised advice", I assumed it won't be entirely free, but some may find that helpful. So long as Equitable don't hide behind the ruse of "If you want to work out your options, take up the offer of reduced-fee advice from SJP" if the "personalised illustration" proves to be inadequate.

I certainly don't like the implication of the choices we're being offered: Vote Yes or No, then what fund you want to invest in. What if we don't like the terms offered by Utmost/Reliance? Will there be no option for "Put it in a transfer queue to my nominated SIPP/pension provider"?

Sorry, is my cynicism showing this morning?

[Deleted User]

Will there be no option for "Put it in a transfer queue to my nominated SIPP/pension provider"?

I emailed a similar question and was told that transfers will be free, at least to start with

JohnWinder

If the transfer of Equitable Life customers’ policies to Utmost is concluded, the choices offered by Utmost do not appear to be good on the whole.
Most of the Utmost funds have entry fees of about 5%. Am I the only one to think that this predatory pricing has become a relic of the past with other fund managers and in other countries, and represents poor value for customers? Ten years ago Tim Hale in his popular book was advising ‘avoid initial fees’, yet all but two of Utmost’s funds have initial fees.
The management expenses, as a percentage of funds invested, seem very high to me compared with similar products from other providers. 1.8%/yr for a deposit account sounds like price gouging, and many other funds have 5-7%/yr fees. How can a business justify this unless it’s operating largely for the shareholders rather than the customers, or is very inefficient in its running?
One of the few legislated options for retirement savings is to take them as a number of lump sums; but with Utmost ‘You will need to transfer to a different pension provider to do this.’ Is this the level of service customers want?
Another of the few options for retirement savings is to use your pension pot to provide a flexible retirement income; but with Utmost ‘Currently you will need to transfer to a different pension provider to do this.’
Will it be a case of 'avoid the 5% entry fee if possible, and get out straight away'?

pafpcg

There's been another mailing from Equitable Life (dated 28th May) with dates for the proposed take-over of the with-profits fund by Utmost Life & Pensions:

22-July - Initial High Court Hearing to seek permission to seek a vote.
early August - Decision Pack with details of the proposed take-over and voting forms.
mid August - Investment Pack with details of the unit-linked funds offered by Utmost.
30-Oct - deadline for voting.
1-Nov - Formal Policyholders' Meeting and EGM.
mid Nov - Second High Court Hearing to approve take-over.
13-Dec - deadline for submitting investment choice by each individual policyholder.
1-Jan - Implementation of the plan.

From my skim reading of the accompaning booklet, it's all about the procedures and the legal framework of the proposed take-over of the with-profits fund - there's no new information about what Utmost will be offering, we'll have to wait until August for that.

POPPYOSCAR

pafpcg wrote: »

There's been another mailing from Equitable Life (dated 28th May) with dates for the proposed take-over of the with-profits fund by Utmost Life & Pensions:

22-July - Initial High Court Hearing to seek permission to seek a vote.
early August - Decision Pack with details of the proposed take-over and voting forms.
mid August - Investment Pack with details of the unit-linked funds offered by Utmost.
30-Oct - deadline for voting.
1-Nov - Formal Policyholders' Meeting and EGM.
mid Nov - Second High Court Hearing to approve take-over.
13-Dec - deadline for submitting investment choice by each individual policyholder.
1-Jan - Implementation of the plan.

From my skim reading of the accompaning booklet, it's all about the procedures and the legal framework of the proposed take-over of the with-profits fund - there's no new information about what Utmost will be offering, we'll have to wait until August for that.

Yes when I received it I thought good perhaps some actual information about the new scheme.

But no.

What a waste of paper.

chazzaboy

I am a with profits guy and Id like to know who is Utmost? Never heard of them - does anybody know their background - how safe are they? Also strange to me is that this changeover started with Reliance and seems odd to me that mid process to change - does anybody agree? Equitable appear to be a bigger player than Utmost so why not go with one of the big boys LV/Aviva etc?

pafpcg

chazzaboy wrote: »

I am a with profits guy and Id like to know who is Utmost? Never heard of them - does anybody know their background - how safe are they?

If you're going to trust your pension with them, then doing your own research would be sensible. I'll be waiting until I see what Utmost will be offering (no point researching if we'll be going elsewhere), but feel free to share your findings!

Also strange to me is that this changeover started with Reliance and seems odd to me that mid process to change - does anybody agree?

Following the takeover of the Reliance group in April 2018 by the Utmost group, there's been a name change ("rebranding") - the agreement between Equitable Life and Reliance came AFTER the takeover by Utmost. The outfit seems to have grown through takeovers and mergers over the past half-century - the takeover of Equitable Life is just another.

Equitable appear to be a bigger player than Utmost so why not go with one of the big boys LV/Aviva etc?

Because Reliance/Utmost offered the best deal? My *speculation* is that the board of Equitable Life stipulated that the continued employment of the staff was a condition of the takeover. A large company such as Aviva or Allianz would probably expect to see profitability gains by taking over the Equitable's business but running it using their existing staff, so might not be interested.