To clarify confusion among IFAs surrounding the application of Equitable Lifes recent terminal bonus cuts, the 16 per cent cut applies to the value of the whole pension fund.
If on maturity the guaranteed element of the fund is higher than the result of the cut, the guaranteed value will be paid. For example a £100,000 policy is now worth £84,000. If the guaranteed element is £80,000, the maturity pay out will be £84,000. If the guaranteed element is £90,000, this figure will paid. The guaranteed figure does not apply to non-contractual surrenders.