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Legal threat hangs over Equitable rescue plan

Equitable Life&#39s rescue plan could be under threat from a legal challenge which may mean thousands of members of group pension schemes are still entitled to guaranteed annuities.

City law firm Linklaters says its clients in the unidentified schemes could still be elig-ible for guaranteed annuities after an Equitable member queried the conditions of the society&#39s compromise scheme.

Linklaters believes that pension fund trustees may be unable to sign away their members&#39 guaranteed annuities by voting in favour of the deal.

It says it has not started proceedings against Equitable but admits it is awaiting instructions from clients potentially affected by the loophole.

Equitable says it is unconcerned about any potential challenge because it bel-ieves the policyholders inv-olved – who joined the sch-emes after 1988 – are not entitled to guaranteed annuities because they had already been withdrawn.

Even if the policyholders are found to be eligible, Equitable claims there are provisions in the compromise plan, which would protect it against a legal challenge.

A Linklaters spokesman says: “After considering the issue of whether members of group pension schemes could still be entitled to guaranteed annuity rate policies, we concluded that we were obliged to bring this to the attention of other clients in a similar position. We cannot comment on what they intend to do.”

An Equitable spokesman says: “We do not believe the point raised has any effect on the validity of the vote but nonetheless we will be mentioning it to the court if there is a positive vote.”

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