Equitable Life with profits pension / takeover.

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  • Buffa
    Buffa Posts: 6 Forumite
    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
    Buffa Posts: 6 Forumite
    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
    pafpcg Posts: 878
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    Buffa wrote: »
    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.
    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
    Maffo65 Posts: 30
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    edited 8 October 2019 at 5:56PM
    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?
  • 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.
  • The threat of courts provides at least some protection against an arbitrary reduction.
  • JohnWinder
    JohnWinder Posts: 1,741
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    I’m lost in the primary, secondary etc uplifts, and too time poor now to wade through screens of info. But…..some assumptions about the period between their notification of ‘best estimate’ 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 can’t know how many of these there will be.
    Secondly, the bonds they hold (EL’s 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. There’s no way all of EL’s bonds mature on December 31; and there’s 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 ‘free’ financial advice being offered to policy holders is surely unknown as it depends on how many people request that advice.
    Fourthly, EL’s staffing and running costs during that period can’t possibly be known precisely.
    From which I conclude that EL can’t 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 can’t see any business choosing that approach, which leaves them with only one option - estimate but don’t guarantee the final uplift.
  • 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
    Maffo65 Posts: 30
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    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
    pafpcg Posts: 878
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    Maffo65 wrote: »
    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.
    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.
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