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Equitable deals a new blow to policyholders with harsher penalties

Equitable Life has slashed its maturity and surrender values further in a bid to maintain solvency, blaming recent stockmarket falls.

In a move described by Equitable as “most regrettable”, it will now reduce maturity values by 10 per cent, rather than 4 per cent, unless this brings the value to below the guarantee, which it will honour.

Early surrenders will incur a market value reduction of 20 per cent, up from 14 per cent.

At the same time, Equitable has disclosed that only 15 per cent of its ailing with-profits fund is in equities, sparking fears that there is little margin left for the fund to recover and that it has been selling equities at the worst possible time.

Equitable says it has had to take action because of further falls in equity values and market volatility. It has been unable to secure any savings from outsourcing its administration.

The new MVRs apply from July 1, 2002. Policy forms already received will have the previous values applied.

The Bureaux director Ronnie Lymburn says: “This looks like a ship that is sinking. The people who were loyal are getting screwed. The lack of equities means people are not going to get a ride back up. Hanging on in there is not necessarily the right thing to do.”

Equitable Members&#39 Action Group chairman Paul Braithwaite says: “This third reduction in a year is a sad indictment of a decade of mismanagement. It seems like a deliberate deterrent. Investment falls can only explain 2 per cent of the increases.”

Equitable Life chairman Vanni Treves says: “We must ensure the society remains solvent and that the policyholders choosing to leave do not take more than their fair share.”


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Global benefits predictions for 2015 from Jelf International

According to Doug Rice, managing director of international services, in 2015, managing their international duty of care will become an increasing focus for UK-based overseas organisations in both managing their short- and longer-term challenges. As a result, strong independent advice and innovative technological solutions will become more important than ever in managing their global benefits.


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