Equitable Life Payment Scheme

An update to the Equitable Life Payment Scheme has been published on a dedicated website set up by the Treasury relating to all aspects of the payment scheme. The web site appears to answer most of the questions that I have seen about the scheme and as it affects WPAs

http://equitablelifepaymentscheme.independent.gov.uk/index.htm

I strongly recommend that you read it.

Peter Scawen

News Update 17th May 2011

Equitable Life Payment Scheme

The Equitable Life Payment scheme was published by the Government on May 16, 2011.

Details of the scheme can be found at

http://equitablelifepaymentscheme.independent.gov.uk

A call centre � 0300 0200 150 � has also been set up for policyholders.

The relevant details can be found under the section headed Background Documents

PDF - The Equitable Life Payment Scheme design � main document

The Equitable Life Payment Scheme design � The main part of the Scheme Design for Parliamentary Review including a brief summary

PDF - The Equitable Life Payment Scheme design � technical annex

The Equitable Life Payment Scheme design � technical annex
Part of the Scheme Design for Parliamentary Review

I strongly encourage you to read the Main document. The technical annexe sets out how the calculations will be done.

Peter Scawen

May 17

13th December 2010

- The Spending Review announced on 20 October 2010 has given �1.5 billion to Equitable Life with profit policyholders with the main concentration on with profit Annuitants. The payments will start in 2011, for those who became annuitants after September 1992, over the life of the annuitant.

Click here for some Questions and Answers

ELTA � The Reason Why

ELTA was set up in 2003 as I considered at the time and as time has proved the With-Profits Annuitants (WPAs) of Equitable Life were let down by the Regulator for the following reasons.

1. The purpose of compulsory annuity purchase is to require individuals to secure a safe and reliable income for retirement when, crucially, they will be unable to supplement their income from alternative sources. Since this is a key statutory requirement that an individual MUST buy an annuity, it follows that the regulating authorities have an absolute obligation to ensure that the products offered on the market can meet that statutory objective. Any failure to do so must inevitably result in a justified claim for mal-administration.

2. The With-Profits annuity (�WPA�) was a particularly complex financial product, poorly understood by the annuitants who purchased it and many of Equitable�s representatives who sold it. It was predicated on the belief that the Equitable Life Assurance Society was a properly regulated, blue chip, institution of sound financial standing. Annuitants would not have purchased the product had they believed otherwise. More than any other product the Equitable�s finances were key. Without its apparent financial strength, the product could not have been sold

ABOUT ELTA

Welcome to ELTA, which is dedicated exclusively to work for ALL of the With Profits Annuitants of Equitable Life, now with the Prudential, and who are members of ELTA and all those who are not, but hopefully who will also benefit from our work.

ELTA is part of E7, which consists of the seven Equitable action groups who have all combined in their fight for government compensation.

ELTA has an advisory committee which at present include:

Richard Griffiths

Steven Pearl

Roy England

John London

The co-ordinator of this committee is Peter Scawen.

eltaorg@orange.fr

If you would like more information, to join ELTA or wish to contact him you can do so at:

00 33 5 56 71 96 47

La Levaille

33220 Caplong

France

3. Three core issues differentiate with-profits annuitants:

	a.	Their inability to surrender the policy or transfer it to another provider;
	b.	The importance of the purchase in the context of providing a safe and reliable income, when the individual�s abilities to find replacement income were increasingly remote; and
	c.	The increase of their losses as they get older because of the central role of the increasing, but un-guaranteed terminal bonus that was required to maintain their retirement income.

4. The WPA was deeply flawed as a source of retirement income. Probably it could never have delivered what it promised. The risk annuitants were invited to accept was the risk of the market, hedged by Equitable�s (allegedly) superior financial management and adequate reserves to support a smoothing policy. In fact there were no reserves to cover terminal bonus policy, no smoothing policy and Equitable was managed incompetently. The ever-increasing gap between the �guaranteed� annuity and the total annuity was not covered by reserves, nor did it feature as a liability in the accounts and statutory returns. It could therefore only be met either by an ever increasing sales effort, so that new investments were required to meet the obligations of the old, or, as occurred from November 2002, by not paying it. In effect, Equitable created a pyramid scheme.

5. There was a significant failure of regulation. It was the responsibility of the regulator to ensure that the products on the market were in fact capable of delivering what they were offering, since annuitants are reliant on the regulator to carry out the sort of tests that lie beyond the competence of the general public.

6 The Ombudsman�s three critical findings that the information on financial standing was incomplete, that liabilities were understated, and that the solvency position was not appropriately verified leading to a misleading picture of the financial health of Equitable, mean that the clear injustice sustained by With-Profits Annuitants was the purchase of a product, which, without this mal-administration, they would not have purchased.

Equitable Life Payment Scheme

Equitable Life Payment Scheme

PDF - The Equitable Life Payment Scheme design � main document

PDF - The Equitable Life Payment Scheme design � technical annex

READ: Peter Scawen's Report - Equitable Life and its Handling of With Profits Annuities