Campaigner calls for rethink on Equitable Life compromise

EQUITABLE LIFE is under pressure to alter the details of its financial compromise with customers amid claims the proposals are unfair to 69,000 of its pensioners.

Annuity Direct, the brokerage which precipitated the legal battle which led to Equitable's collapse, will this week challenge Equitable's board over its proposed treatment of retired customers currently drawing on a with-profit annuity.

Stuart Bayliss, director of Annuity Direct, says the 69,000 with- profit annuitants are being asked to accept a cut of 1.5 per cent to 2 per cent in the value of their policy annually for years to come, but under current rules are not free to leave the society.

Mr Bayliss wants this group to be allowed to transfer their fund to another provider or choose to swap it from a with-profit to a conventional annuity to give them more certainty about future returns.

He will also say that Equitable could follow the example of Standard Life, Prudential and Norwich Union in allowing customers to adjust their annual rate of return, so that they could choose to take less of their annuity now and leave a larger chunk until later.

Equitable has formulated a compromise scheme to try to draw a line under its guaranteed annuity rate liabilities by encouraging holders to give up guarantees in return for a one-off uplift in the value of their policy of on average 17.5 per cent. Equitable is also trying to persuade non- GARs to accept a boost of 2.5 per cent in return for promising not to sue the society.

Both groups will vote on the final compromise proposal in December. If ratified, the society will receive an extra pounds 250m from Halifax, which bought most of its assets for pounds 500m in February. Mr Bayliss will also call on Equitable to increase the uplift to funds of non-GARs taken out from 1999 when it formulates the final terms of the compromise.

Customers who took out a non-GAR with-profit policy after that date were told that the society's GAR contracts should cost no more than pounds 50m, which would have left them believing that Equitable's funds were on a sound financial footing. In fact, the liabilities are estimated at pounds 1.5bn after the House of Lords ruling last July.

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