Equitable Life to pay interim bonus and reverse cut in policy values in surprise move |
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| News - Healthcare | |||
| Written by Ray Clancy | |||
| Wednesday, 06 January 2010 09:17 | |||
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It is a rare piece of good news for investors. Many of the society’s members lost money when it came close to collapse and it was forced to close to new members in 2000. It has been struggling to recover from being on the brink of collapse. Now its with-profits pension savers will receive a 3.5% interim bonus on their polices while last year's cut of 2% is being reversed. Savers in its other life funds receive a 2.8% interim bonus, and a further 1.6% to reverse a cut made last year. ‘The society is determined to recreate value for policyholders and these increases in policy values are small but important steps along this road,’ said Chris Wiscarson, Equitable Life's chief executive. He explained that two things had helped; investment returns improved in the second half of the year, and the society has freed £100 million from its reserves as a result of a recent decision to contract out its administration to the HCL insurance services company from 2011. The most recent stage of the long-running saga saw the government agree to widen the scope of a forthcoming compensation scheme for some of the society's members who lost money in the aftermath of its near-collapse. The much-reduced society has about 400,000 policyholders who are still saving with it. About 180,000 people have individual policies while the rest are members via group policies, such as those offered by their employers' pension schemes. Equitable reduced the value of with-profits pension and life policies by 2% and 1.6% respectively in March last year in response to what it described as the ‘challenging economic conditions’ at that time. Worth £26 billion in its prime, the group's with-profits fund is now valued at £5.5 billion and has around 200,000 policyholders. The fund, which is mainly invested in less volatile gilts and bonds, is in run-off after Equitable failed to find a buyer for it. Add this page to your favorite Social Bookmarking websites          
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