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  • FIRST POST
    • pensionpawn
    • By pensionpawn 12th Apr 19, 11:19 PM
    • 189Posts
    • 156Thanks
    pensionpawn
    Equitable Life with profits pension / takeover.
    • #1
    • 12th Apr 19, 11:19 PM
    Equitable Life with profits pension / takeover. 12th Apr 19 at 11:19 PM
    I thought I would open a thread for everyone who have a pension with them who may wish to share their experience and offer advice while we wait for the resolution of the take over.

    I was within days of commencing a transfer to a Sipp last summer when the news broke and have stayed put watching my fund continue to grow at 3.5% whilst this all sorts itself out.

    I have seen no news since around last October. Does anyone else have anything to add?

    Equitable Life
    Last edited by pensionpawn; 12-04-2019 at 11:24 PM. Reason: Inclusion of link to Equitable Life.
Page 10
    • Buffa
    • By Buffa 7th Oct 19, 10:32 PM
    • 6 Posts
    • 9 Thanks
    Buffa
    I meant that, at the time they vote, policyholders are taking a risk on the value of the uplift which they wont know for sure until later. I do not know at what point after the second court hearing EL will advise policyholders what their uplift will be (precisely). Between that date and the implementation date (1 January 2020). EL / Utmost have a risk of a financial setback but, as you indicate, this risk may be covered by insurance.
    • Buffa
    • By Buffa 7th Oct 19, 10:35 PM
    • 6 Posts
    • 9 Thanks
    Buffa
    My point was that, EL really should have been able to set a guaranteed bottom limit to the uplift, especially so if they have the insurance mentioned.
    • Buffa
    • By Buffa 8th Oct 19, 12:08 PM
    • 6 Posts
    • 9 Thanks
    Buffa
    I have just heard from JLT that the definitive uplifts will not be known (or communicated) until the Implementation Date (1 Jan 2020) and that there will be no, more accurate, revised estimates of the uplifts in the meantime.
    • pafpcg
    • By pafpcg 8th Oct 19, 5:55 PM
    • 423 Posts
    • 391 Thanks
    pafpcg
    Uplift Calculation Date
    I have just heard from JLT that the definitive uplifts will not be known (or communicated) until the Implementation Date (1 Jan 2020) and that there will be no, more accurate, revised estimates of the uplifts in the meantime.
    Originally posted by Buffa
    Thanks for that clarification.

    In my expectattion that Equitable would give us a true and fair proposal document, I had assumed that we'd know the Primary Uplift in October, based on these two quotes from the Explanatory Booklet Part B.

    Quote from the Timetable on page9:
    "Calculation Date 30 September 2019 The date at which certain values which form part of the Secondary Uplift calculation will be calculated."

    Quote from paragraph 20.47 on page18:
    "Step 2 Calculate the Primary Uplift
    Once we know what the Secondary Uplift Amounts will be, we will be able to calculate the total assets which are available to be allocated through the Primary Uplift.
    "

    A closer examination of that first quote reveals that I've fallen into a mistaken assumption and that the calculation of "certain values" on the Calculation Date does not preclude that there are still further values in the Secondary Uplift which are unknown on the Calculation Date. Silly me!
    • Maffo65
    • By Maffo65 8th Oct 19, 6:46 PM
    • 16 Posts
    • 19 Thanks
    Maffo65
    In view of this uncertainty about the actual size of uplifts until the Implementation Date, is anyone now thinking of voting against the Proposal?

    At this stage I'm still inclined to vote in favour, and it seems to me that most people who posted on this thread sounded likely to do so.

    Any dissenters?
    Last edited by Maffo65; 08-10-2019 at 6:56 PM.
    • tomargyll
    • By tomargyll 9th Oct 19, 6:01 PM
    • 5 Posts
    • 4 Thanks
    tomargyll
    I am afraid I am still not convinced. And to date will probably vote against.

    Why ,,,,, it's down to the fact we don't have the final uplift values to vote for. We vote for the proposal then they in a whim reduce the estimated uplift values we have without any redress for the policyholders. Mmmmmm The policy uplifts we have at present look very good,,,, However if they are not confirmed as final then we can be taken for a complete bunch of suckers.

    I remember vividly when we got an uplift in our values in return for giving up our GAR's for only in a few months to lose that uplift and more when the cut the policy values.

    So I will probably vote No, as I just don't trust them.
    • Mordko
    • By Mordko 10th Oct 19, 2:11 AM
    • 607 Posts
    • 323 Thanks
    Mordko
    The threat of courts provides at least some protection against an arbitrary reduction.
    • JohnWinder
    • By JohnWinder 10th Oct 19, 1:32 PM
    • 55 Posts
    • 41 Thanks
    JohnWinder
    Iím lost in the primary, secondary etc uplifts, and too time poor now to wade through screens of info. ButÖ..some assumptions about the period between their notification of Ďbest estimateí of total uplift (Time 1), and the total uplift being paid to policy holders (Time 2):
    Firstly, some policy holders during this period will die and be paid out, and others may be forced to liquidate without the total uplift. EL canít know how many of these there will be.
    Secondly, the bonds they hold (ELís main assets) will change in value during that period; bond prices change in value as frequently as share prices (and as unpredictably) unless you hold them to maturity. Thereís no way all of ELís bonds mature on December 31; and thereís no way EL can predict their future value other than at maturity. Perhaps they solved this with some insurance of futures contracts.
    Thirdly, the money EL spends in that period on the Ďfreeí financial advice being offered to policy holders is surely unknown as it depends on how many people request that advice.
    Fourthly, ELís staffing and running costs during that period canít possibly be known precisely.
    From which I conclude that EL canít have known (at Time 1) how much money will be available at TIme 2. So should they have guaranteed the Time 2 uplift, and risked closing the business at Time 2 with money left over, or short changed policy holders if there was insufficient money for any of the above reasons (or any other basis for uncertainty of final residual assets, that exists)? I canít see any business choosing that approach, which leaves them with only one option - estimate but donít guarantee the final uplift.
    • allgreek
    • By allgreek 11th Oct 19, 11:10 AM
    • 3 Posts
    • 3 Thanks
    allgreek
    Drawdown from Utmost
    Today I got another letter from Equitable urging me to vote. It included a leaflet from Utmost which contains a section headed OUR PRODUCTS. The text in this section says:
    We're developing Utmost Drawdown for customers wishing to access their pension pots flexibly, to be available early 2020.
    I searched on the Utmost web site and "drawdown" was only found on one page which says the same as the leaflet (in different words).

    This looks to me like Utmost don't have a plan for anything until it becomes clear they will need to have one. How can a pension company not have a drawdown plan? If I want to do drawdown after the transfer to Utmost, I will be voting for the "Proposal" [Utmost's term] without any idea how "Utmost Drawdown" will work. Perhaps they will large charges for every drawdown.

    I can't find anything to inspire confidence in Utmost.
    • Maffo65
    • By Maffo65 16th Oct 19, 12:35 AM
    • 16 Posts
    • 19 Thanks
    Maffo65
    Independent Expert Supplementary report issued
    A supplementary KPMG report was published on October 11 and is available on the EL website (Latest News section). It includes:
    • Confirmation that conclusions on fairness have not changed
    • Processes and governance surrounding the calculation of the uplift
    • Policyholder communications
    • The formal arrangement between the Society and Utmost Life and Pensions which sets out the servicing and administration standards applicable to the business that is not transferred
    • Conclusions on the day-to-day practical administration of the UK-style German with-profits business.
    Well worth a read IMO, if you haven't already done so.
    • pafpcg
    • By pafpcg 16th Oct 19, 4:40 PM
    • 423 Posts
    • 391 Thanks
    pafpcg
    Supplementary Report
    A supplementary KPMG report was published on October 11 and is available on the EL website (Latest News section).
    Well worth a read IMO, if you haven't already done so.
    Originally posted by Maffo65
    Thanks for spotting this latest report. Some valuable additional data and some snippets:

    "In practice, Utmost Life and Pensions will apply the 1 January 2020 uplift at around 2 weeks after this date." So it'll be mid-January before immediate transfers-out can begin.

    The take-up of the advice being offered has been lower than expected. "The expected total cost of advice [c£8Million] translates to around 0.4% of the uplift." The original budget was, if I recall correctly, 1% of the uplift, so that might mean a slightly higher primary uplift.

    "The Primary Uplift is currently expected to be within the range of 65% - 75%." So no major surprises so far.

    There's also a review of all the objections raised to the Proposal, including what I interpret as an indication of the voting pattern to date, but it may refer only to the voting pattern of those objecting - it's in Section 4.3.
    • feet_up
    • By feet_up 17th Oct 19, 4:59 PM
    • 14 Posts
    • 7 Thanks
    feet_up
    NHS/Equitable AVC
    Since the NHS are clearly not going to tell you what is going on, or consult policyholders I thought I would pass on the result of my 'chasing up' the policy manager in the Department of Health and Social care.

    "The Department of Health and Social Care is continuing to consider the issue and is taking advice from the Government Actuaryís Department (GAD) on the impact the Equitable proposal will have on members. GAD have been provided with individual policyholder information (redacted of personal information) to allow them to perform informed analysis of member benefits. It is our intention to vote for the option which provides the greatest benefit to the greatest proportion of members, and will vote ahead of the 30th October deadline.
    The decision and required next steps for members will be communicated following the deadline"

    So now we know don't we.

    Hope this is of interest. It would be good to know how many votes the NHS has at its disposal.


    Feet Up



    • justaquickie
    • By justaquickie 20th Oct 19, 4:49 PM
    • 66 Posts
    • 45 Thanks
    justaquickie
    Insight sought
    Hi,
    I intend to vote against the proposal, but Iíd certainly be interested in any insight or considerations that may sway me.

    My strongest reservation is based on numbers given in my illustrative statement, which projects in 8 years I will be 15% better off than WP if higher rate returns, 15% better off than WP if medium rate returns, and 8% WORSE off than WP if lower rate returns. With 8 years to retirement and with other UL investments and pensions to balance, I would prefer cautious fund allocation with limited market exposure, which is contrary to what appears to be required to match the incumbent WP projections, despite the uplift.

    In short, if Iíd been offered a transfer under these terms - even with the same uplift - I wouldnít have taken it, but stayed put. So, why should I vote for the proposal? (I do understand everybodyís circumstances are different.)

    Appreciate any thoughts. Thank you.
    • pafpcg
    • By pafpcg 20th Oct 19, 5:22 PM
    • 423 Posts
    • 391 Thanks
    pafpcg
    NHS/Equitable AVC
    It would be good to know how many votes the NHS has at its disposal.
    Originally posted by feet_up
    Only one!

    Note:
    1: Trustees of Group Schemes can place both a single "Yes" and "No" vote assuming the scheme members indicate both positive and negative preferences in whatever exercise the trustees undertake in surveying their members, but since NHS trustees don't seem to be bothering to ask, it'll just be the one "Yes" vote. [See 46.3 on page 38 of Part B of the Explanatory Booklet]

    2: For Vote Two, all votes will have a "vote value" depending on the value of the policy funds held with Equitable. Trustees of Group Schemes will be able to split the vote value of their vote in accordance with their scheme members' preferences. [See 80.16a on page 58 of Part B of the Explanatory Booklet].
    Since the NHS scheme will cast just a "Yes" vote, all the vote value for the entire NHS scheme will count for the "Yes" column, which will rather dwarf the meagre "10" vote value of my partner's vote!
    • pafpcg
    • By pafpcg 20th Oct 19, 6:15 PM
    • 423 Posts
    • 391 Thanks
    pafpcg
    I intend to vote against the proposal, but Iíd certainly be interested in any insight or considerations that may sway me.

    My strongest reservation is based on numbers given in my illustrative statement, which projects in 8 years I will be 15% better off than WP if higher rate returns, 15% better off than WP if medium rate returns, and 8% WORSE off than WP if lower rate returns. With 8 years to retirement and with other UL investments and pensions to balance, I would prefer cautious fund allocation with limited market exposure, which is contrary to what appears to be required to match the incumbent WP projections, despite the uplift.
    Originally posted by justaquickie
    The differences in your projected values for the two schemes over eight years have surprised me. The five-year projections for the value of my partner's fund all indicate higher values for the Proposed scheme (Utmost) over the existing with-profits scheme if the Proposal does not proceed (WP):

    Higher rate: WP-£158k Utmost-£187k
    Medium rate: WP-£134k Utmost-£159k
    Lower rate.: WP-£114k Utmost-£137k


    I wouldn't have expected the extra three years of lower growth rate to reverse the relative values to that extent. But I don't doubt that Equitable have tweaked the calculations to show the benefits of the Proposal in as favourable a light as possible.....
    • justaquickie
    • By justaquickie 20th Oct 19, 8:01 PM
    • 66 Posts
    • 45 Thanks
    justaquickie
    The differences in your projected values for the two schemes over eight years have surprised me. The five-year projections for the value of my partner's fund all indicate higher values for the Proposed scheme (Utmost) over the existing with-profits scheme if the Proposal does not proceed (WP):

    Higher rate: WP-£158k Utmost-£187k
    Medium rate: WP-£134k Utmost-£159k
    Lower rate.: WP-£114k Utmost-£137k


    I wouldn't have expected the extra three years of lower growth rate to reverse the relative values to that extent. But I don't doubt that Equitable have tweaked the calculations to show the benefits of the Proposal in as favourable a light as possible.....
    Originally posted by pafpcg
    Many thanks for replying, pafpcg, and for sharing your partner's numbers. If, like yours, my deltas were all above 18%, the decision would be simpler. I, too, was surprised by my projected values (in 8 years):

    Higher rate: WP-£29.1k Utmost-£33.3k (+14.4%)
    Medium rate: WP-£22.5k Utmost-£25.8k (+14.6%)
    Lower rate: WP-£21.9k Utmost-£20.3k (-7.3%)

    The disparity with your numbers does make me wonder if the current provider's name may be somewhat disingenuous, and the proposed one even more so? I appreciate my fund size is modest, but are turkeys really expected to vote for Christmas?
    • pafpcg
    • By pafpcg 21st Oct 19, 1:01 PM
    • 423 Posts
    • 391 Thanks
    pafpcg
    Projection rates
    If, like yours, my deltas were all above 18%, the decision would be simpler. I, too, was surprised by my projected values (in 8 years):

    Higher rate: WP-£29.1k Utmost-£33.3k (+14.4%)
    Medium rate: WP-£22.5k Utmost-£25.8k (+14.6%)
    Lower rate.: WP-£21.9k Utmost-£20.3k (-7.3%)
    Originally posted by justaquickie
    An interesting comparison!

    I don't know for certain what formula and growth-rate factors which Equitable have used to calculate the projections in each policyholder's illustration but I would expect that the comparison between the existing with-profits (WP) and the proposed scheme (Utmost) to be consistent, varying only due to the differing growth-rates for higher, medium & lower. My expectation would be that the percentage differences between WP and Utmost would be identical no matter what the size of the actual fund. The other unknown variable is the Utmost fund allocation - it varies with policyholder age moving towards more cautious funds with increasing age (which makes direct comparison of projected values between individual policyholders less reliable).

    I find it difficult to explain why your lower-rate comparison goes negative - just looking at the pattern of your numbers makes me wonder why your lower-rate WP figure is so high - it's only £0.6k less over eight years than the medium-rate WP figure! Could it be because the WP's guaranteed 3.5% growth-rate is preventing the WP fund from losing value in comparison with the non-guaranteed Utmost fund? But then why isn't there a similar effect on my partner's lower-rate comparison? I do know that the guarantee has a value for policyholders who have many years before taking their pension benefits.

    Anyone else prepared to share their projection figures in the nine days left before we have to submit our votes?
    • Maffo65
    • By Maffo65 21st Oct 19, 4:49 PM
    • 16 Posts
    • 19 Thanks
    Maffo65
    Anyone else prepared to share their projection figures in the nine days left before we have to submit our votes?
    Originally posted by pafpcg
    Mine are in line with your partner's in relative terms (though the totals are smaller), and were calculated using interest rates of 3.3%, 1.3% and -0.7% p.a. respectively, over a ≈ 5.5 year period.

    I'm assuming the same hypothetical rates were used for everyone?
    Last edited by Maffo65; 21-10-2019 at 4:55 PM.
    • Mordko
    • By Mordko 21st Oct 19, 5:59 PM
    • 607 Posts
    • 323 Thanks
    Mordko
    We are missing the wood for the trees. Projections are a direct function of an assumed growth rate, are a crapshoot and sometimes confuse people more than anything. Focusing on a bunch of made up numbers ought not be the main driver.

    To me, it comes down to this:

    1. If you get the fallout and invest in stocks or a combination of stocks and bonds, you will be significantly better off unless you have little time left before you need the money and there is a market crash. Long term stocks give much better return than the “guarantee”.

    2. If you get the fallout and invest in cash-like fixed income, you will be better off unless you have a really long time horizon. Bonds may or may not provide better return than the guarantee. Even if not, it will take decades before the added value of the fallout is eroded as a result of this lower growth.

    Last but not least... What happens to the guarantee if/when EL goes bankrupt?
    Last edited by Mordko; 21-10-2019 at 6:19 PM.
    • Scot_39
    • By Scot_39 22nd Oct 19, 12:07 AM
    • 28 Posts
    • 33 Thanks
    Scot_39
    Supplementary Report
    Thanks for making us aware of the update. A few potential pros / cons - depending on your position - have come from the recent Supplementary Report - bits are definitely worth reviewing. On the down side
    "I note that as at the date of this Supplementary Report, the Societyís SCR solvency coverage is lower compared with 31 December 2018, mainly due to lower interest rates..."

    The main take from the update is he still thinks things are fair - but due to changes in interest rates since Dec 18 calc assumptions.
    "The current estimates show that the Primary Uplift is slightly higher than the 72% of Policy Values at 31 December 2018 (and higher than the illustration uplift of 68%)."

    However, despite EL "adjusting it's deriviative holdings", the report still has to admit that 72% is not fixed - and so give the updated range quoted by pafpcg above:
    "The Primary Uplift is currently expected to be within the range of 65% -75%"
    However - at least this is a positive change - and the new expected bottom end at 65% - although still not guaranteed - is close to the personal illustration values.

    The information on secondary uplifts is less explicit - the calculation date has come and gone - 30 Sep - they have the numbers "fixed" - but not disclosing - but on the face of it also encouraging - at least for some - as the allocation has increased.
    "A decrease in interest rates will make Investment Guarantees more valuable, and this is reflected in the uplifts calculated via the Secondary Uplift"
    "The total cost of the Secondary Uplift has increased from c£100 million at 31 December 2018 and it is expected to be c10% of the assets available for distribution."
    Suggesting as well as primary - the secondary should go up for at least some - but then cautions that the primary increase impacts some of the fairness tests - so guess risk some members might lose some of their secondary when get the predicted 4% or so primary uplift boost.
    If they have new secondary bands / figures - cannot see why they don't release them - even with the normal not guaranteed caveats - wouldn't higher numbers help them sell the scheme.
    For me - the revised range and figures - provides at least a reassurance that the illustrations should be a good indication of what we are likely to get - possibly an underestimate if anything - if the scheme goes ahead in three months time.

    One other point that could have been missed above - which may adversely impact personal illustrations for ELWP stay figures - if done the same as my own - which were done with a 55% capital distribution - but as a result of the lower interest rates impacting forward projections - the expert notes
    "Lower solvency coverage serves to delay the increases in the projected CEF"
    "I would expect that the Extent Better Off results may increase at shorter durations overall due to a lower projected CEF, and reduce at longer durations as the tontine effect comes into effect (higher later releases of CEF)"
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