Pensions analyst Laith Khalaf says while the 5.5 per cent rise is good news, he warns that the increase is not locked in and can be taken away in the future.
He also says it fails to compare favourably with the returns made by other investments over 2009.
Khalaf adds: “Something is better than nothing, but policyholders could have achieved better returns in other funds.
“This is likely to continue to be the case because the investment strategy of the Equitable fund is so conservative. There is also the possibility that any cessation or indeed reversing of QE could have a negative impact on the price of gilts and consequently the value of the fund.”
When compared to other investments, Khalaf says pension investors could have seen a 17.29 per cent return from the ABI cautious managed, 20.51 per cent from the ABI balanced managed or 31.51 per cent from Schroder’s managed balanced fund.
Equitable Life chief executive Chris Wiscarson says: “The society is determined to recreate value for policyholders and these increases in policy values are small but important steps along this road.”