Equitable Life could be stung with a £1.5bn bill after seeming to lose its long-running legal battle on guaranteed annuities in the Court of Appeal.
A panel of judges ruled by a two-to-one majority Equitable Life's move to cut 90,000 pension bonuses was unlawful. The life office had wanted to cut the bonuses of guaranteed annuity rate policies by up to 25 per cent.
Last year Equitable won the court case it had bought on guaranteed annuities but the case was then taken to the Court of Appeal.
Life office analyst Ned Cazalet says: “This is extraordinary, a big surprise. If Equitable are forced to pay out more to these people, it will have to pay less to others. It's a mutual so the money has to come from somewhere.”