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Equitable deal could see lower payouts to GAR holders

Equitable Life is only weeks away from issuing a compromise deal which

could save the society from spiralling uncertainty but payoffs to

guaranteed annuity rate holders could be lower than expected.

The deal should be published to policyholders in mid-September following

an “open and constructive” meeting between policyholder action group

representatives and Equitable&#39s board last week.

Any proposals will have to account for potential misselling claims from

non-GAR holders.

Nicholas Warren QC is currently investigating whether claims can be made.

The outcome of his report could affect the scope of the compromise and the

size of any uplift to GAR holders in exchange for their guarantees.

The society has until March 1, 2002 to clinch the compromise, which will

secure a £250m injection from Halifax. It will need final High Court


The fate of with-profits annuitants was also on the meeting&#39s agenda.

Equitable is investigating whether they can switch to conventional


Hopes of getting policyholder agreement had foundered after the recent

bonus cuts but the face-to-face meeting has revived optimism. Another

meeting has been set for next week. IFAs, however, remain sceptical that

the compromise can be reached, despite best efforts by action groups.

Income Drawdown Bureau director Ronnie Lymburn says: “They are trying to

test the water with the action groups to gauge the strength of feeling

towards the compromise. But they have to remember the action groups are not

particularly representative of the policyholder population as a whole.

Getting the scheme agreed is a massive leap, even with action group



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