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More woe for Equitable with-profits annuitants

Equitable Life with-profits annuitant holders are still facing a bleak future as hopes of having their income levels boosted have once again been dashed.

Chief executive Charles Thomson is writing to policyholders to tell them that att-empts to recalculate the growth rates on which their annuity is based will not improve their situation.

With-profits annuitants have arguably been hit hardest by the company&#39s financial troubles as they are unable to move their money elsewhere.

Their income stream is det-ermined by growth rates that are anticipated when the policy is taken out. These have often been quite high but they have been hampered by bonus cuts across the board and annuitants have seen their income levels fall.

Equitable has looked at the possibility of rebasing the growth levels to lessen the impact on income for with-profits annuitants, giving them a lower income for number of the early years but a higher income in the long term.

But Equitable says it has found this will not improve their funds and is promising to continue to look at other options that might bolster the dwindling incomes of with-profits annuitants.

Speaking at the NAPF Conference in Brighton last week, Thomson said the society remains solvent although the margin is “relatively thin”.

Thomson is banking on an improvement in investment conditions to pull the withprofits fund through its crisis.

He said: “The solvency is relatively thin. The economics of last year went so profoundly against us. We still have a low free-asset ratio. It is not a rosy story and if we have reasonable investment returns we can come through this. I promised to look at rebasing annuities but it is not going to be attractive for policyholders.”

NAPF Conference, p8


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