Equitable Life with profits pension / takeover.

[Deleted User]

varne27 wrote: »

My point is that the existing 3.5% guarantee is Extremely Valuable and not available in any other market today.

In reply to your points:
1) if voted down and Equitable goes bankrupt then ALL markets have collapsed.
2) Why should inflation of 3.5% have a worse effect on the “market” in which Equitable remains invested than it does on markets in general ?
3) The gilt market is currently at record highs. To suggest same as a short term sanctuary is strange advice.

My choice, like everybody’s, will suit my circumstances, after seeing detail of all of the options.
Other than to point out the value of 3.5% guaranteed, I would not presume to advise anybody.,

We are all expressing opinions here. Everyone decides for themselves.

“My point is that the existing 3.5% guarantee is Extremely Valuable and not available in any other market today.”

Disagree. 5 years ago long term UK government guilts had higher yields. In 5 years from now this could be the case again. “Extremely valuable” is extreme exaggeration. If you have 10k in the with profit fund and your time horizon before drawdown is 10 years then the value is approximately 2-3k extra vs a government bond, but Equitable Life isn’t government. It should really be compared vs bonds available in the industry and one can easily buy something with this rate of return and a similar level of risk.

In reply to your points:

1. Equitable can easily collapse without all markets collapsing. Isnt it likely it will collapse sooner or later? The cost base is fixed (hard to reduce staff further and then the guarantee) while the amount of funds under management is going down every day. We have been lucky as bonds (the underlying investment for with profit policyholders) did well (much better than 3.5%) but it isn’t going to continue.

The maths doesn’t work long term. They will have to raise charges on unit holders again, which would lead to desertions and even less funds under management. Vicious circle.

2. Equitable with profit funds are invested in bonds. Bonds dip in value if inflation and interest rates go up, but that’s short term. The real value (net of inflation) would be destroyed if inflation were to jump unexpectedly and that is a problem. Shares cope with inflation very well. And 3.5% guarantee has zero value if company bonds have similar yields.

3. Short term government bonds provide sanctuary to people with short investment horizon, it’s not all that different from cash.

My personal position is to:

1. Verify that I can indeed leave Utmost without penalties after the transfer and vote “yes”. Then leave if the takeover goes through.

2. If the takeover does not go through then I will be initiating the transfer of funds anyway.

The only reason I stayed this long was because of the inevitable takeover. The amount I have in the “with profits” fund is very small; it’s about 10k, but it was the first pension I took after starting work so has sentimental value

Daisydad

Hello all.
This is a very useful thread as I have received my pack this morning. I've been a little out if the loop and haven't given it much thought as it was my first pension and I don't have a huge amount in it, under £5k actually.

I'm assuming I vote "for" on both counts, but does anyone know if you can cash in the pension if and when the deal is done?

I'm considering reinvesting in to my AVC with my current pension just to make things a bit neater, but have no idea if this is possible??

Thanks in advance.

pafpcg

In my earlier comments* (posts #37 & #41) about the latest batch of paperwork, principally the Explanatory Booklet Parts A & B, I misunderstood what was being presented to the policyholders. I have found that the "Summary of the Policyholder Independent Expert's Report" in Part B of the Explanatory Booklet on pages 130-164 (AppendixVI) is an excellent review of the Equitable Proposal by someone who has the skills & experience but also the time! In particular, the Expert has been given access to Equitable's management, internal discussion papers and policy data. In his annotations to the Proposal, he reveals information not made clear to Policyholders in the Explanatory Booklet Part A or the Scheme details in Part B. Hint: always read the Appendices!

Utmost's unit-linked offerings: In the paperwork, there are references to several unit-based funds. I mistakenly assumed that these were the funds to be offered by Utmost. In fact, these are funds used in Equitable's modelling of the impact of switching from the with-profits fund to a variety of unit-linked funds (Equitable's "Extent Better Off" exercise using policy data from December 2017 & December 2018; see pages 151-153). These dummy funds may have no connection to whatever Utmost may offer.

Equitable's guidance and advice for policyholders: the Explanatory Booklet Part A gives details only part of what will be made available. The Expert on page 156-158 gives the "missing" bits! The total cost of support is expected to be £12-15million (0.8% of the Uplift). The initial support for policyholders is for the voting process; it has been outsourced to Jardine Lloyd Thompson (JLT) as described in the Booklet Part A. For guidance of policyholders in the choice of investment, Hargeaves Lansdown will be offering support, Online Type 1 at £50; Telephone Type 2 at £95 and Full Advice Type 3 at £345. These fees are subsidised by Equitable (see table on page 158).

For those who wish to dig into the Proposal, the Expert's review is well worth reading.

I've emailed Equitable about:
- how policyholders can gain access to the Extent Better Off modelling exercise?
- in the individual illustration for each policyholder, how has the "Non-guaranteed Policy Value" been arrived at? The illustration quotes the Guaranteed Value as at 1st April 2019 (which matches the documentation received in May), but where does this Non-guaranteed value come from? I can't find any explanation.


*I have edited my earlier posts to add this clarification.

pafpcg

Daisydad wrote: »

...., but does anyone know if you can cash in the pension if and when the deal is done?

That's what we're all eagerly waiting to find out! There should be another mailing from Equitable with the Investment Choices booklet - it has been promised for sometime in August. We're hoping it will give details of the costs of retaining investments with Utmost and the options we will have to withdraw or transfer funds and at what cost.

pensionpawn

Is anyone else still waiting for their pack?

[Deleted User]

pensionpawn wrote: »

Is anyone else still waiting for their pack?

Yep. Not sure why one has to have a minimum of 10 characters per message.

pensionpawn

How is the uplift calculated (haven't received my pack yet)? I've been in the scheme over 23 years and have around £27k5 at present. I have less than 18 months until I can access my pension funds and was just about to move to a SIPP when the news of the takeover broke. Hence I'm keen to know whether the age of the policy / balance affects the amount of % age uplift and if anyone knows of any restrictions on moving to a SIPP on 2nd Jan? The way I see it is that the policy is returning just 1.6% above inflation at present and even if there is a market / transfer penalty hit in Jan I'm going to have a higher balance than I currently do and achieve a higher rate of growth for a longer period. As others have said, voting against could cause the company to fail and that is not a welcome prospect.

woolly_wombat

pensionpawn wrote: »

Is anyone else still waiting for their pack?

Yes, I'm also still waiting.
I phoned up and was told they were being sent out in tranches.

woolly_wombat

POPPYOSCAR wrote: »

I complained to them that this was something that was not at all clear in all the documents sent out(that I could find anyway) and as this is something that a lot of policyholders wanted to know I was surprised it was not covered in the FAQs.

They asked me if I wanted to make a formal complaint.

I said no and they said they would pass on my comments.

I do not think the help line would/could put this in writing but perhaps if enough people question this/ complain Equitable might address this in future correspondence?

I will consider raising a complaint.

New_World_Man

Looking through the Utmost website it appears (if I am looking at the right information) that most of their funds/pensions etc. have an initial 5% charge and then fees are 1%+. That doesn’t look particularly attractive. Now there may well be more info to come but if our uplift is then followed by an initial charge and high fees then it affects my views. If hypothetically there was then a separate charge for moving out from Utmost that also loses value from our policies.
Broadly speaking, I have no issue with EL closing down but my concern is more about where our policies end up.
I am also slightly concerned that the uplift will not in fact be as generous as is being suggested but arguably any uplift now should be seen as a bonus. Who knows what financial state EL will be in when it is time for me to retire, with no new funds coming in and shrinking assets (as members continue to retire or die).
That is just me thinking aloud but it is an interesting thread and I doubt that there is any absolute right answer to the issue.