Equitable Life is dashing the hopes of thousands of income-drawdown policyholders by refusing to allow them to transfer their policies.
Under new rules yet to be finalised by the Government, a life office has the final veto over which policyholders can transfer their drawdown plan.
But in calls to the Equitable Life helpline, staff admitted it is planning to prevent all but a small minority of its 18,000-plus drawdown policyholders from transferring to another provider.
It has set a cut-off point of June 29, 2000 and says any drawdown policy sold before this date will be prevented from transferring. Only those sold after this date can move.
By the end of 1999, Equitable Life had sold 18,209 of the total 53,771 drawdown policies sold in the UK, representing nearly £2bn of £6.5bn invested through the product.
Initial fears were that the life office would levy a 10 per cent market value adjustment pen alty on drawdown customers who wanted to transfer.
Clerical Medical pensions strategy manager Nigel Stammers says: “It is a puzzle to us. It would seem to be going aga inst income-drawdown policyholders' rights. We will allow all existing income-drawdown policyholders to transfer out if they want to.”
Skandia head of pensions marketing Peter Jordan says: “This is going to be disappointing for drawdown policyholders with Equitable Life. No doubt, many of them will be hoping Equitable changes its mind.”