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Loophole opens way to Equitable exodus

IFA sources reckon the troubled life office has been inundated with transfer req uests from up to 9,000 policy holders and more than 25,000 transfer enquiries.

Life office analyst Ned Cazalet says there is no quick solution for Equitable despite efforts by action groups to engineer an agreement to stop the outflow of business.

Pension experts say clients who tell Equitable they intend to retire and take benefits but change their minds and go to another provider are within their rights and will not suffer the 10 per cent hit.

Some IFAs say they fully support this way of avoiding the MVA.

Torquil Clark pensions development manager Tom McPhail says: “I would have no hesitation in recommending this to my clients.

“They are within the rules which Equitable wrote and clients are fully entitled to change their mind. Other IFAs may prefer to put one segment into drawdown so their clients are in effect retiring.”

Specialist law firm Arm strong Neal Financial Services partner Gareth Fatchett says: “With clients facing a pension disaster, I can see how this solution would work.”

Cazalet is doubtful that any scheme to cap liabilities could be legally constructed and says any proposal would take a long time to settle.

Dutch insurance giant Aegon is known to be interested in the salesforce and asset management arm and insiders have not ruled out an interest in the rest of the business if liabilities could be capped.

But Cazelet says: “There is no quick fix for Equitable. The guarantees are not a set figure and are volatile.

“Policyholders could give up their guarantees but all members would have to vote, actuarial calculations made and court approval given. Even if the guarantees could be capped, it would still be in dire straits because of stockmarket hits. The black hole is more likely to be between £4bn and £5bn than £1.5bn.”

Equitable spokesman Nigel Webb says: “It is up to people&#39s individual consciences if they decide to lie on their forms.”


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