The recent letter from Martin Brook (Money Marketing, August 9) demonstrates that even now confusion reigns over Equitable Life.
My own conversations with Equitable place an entirely different interpretation on the application of the 16 per cent reduction.
I am told that, while the reduction is indeed applied to the non-guaranteed fund, it is actually calculated on the full fund. So, based on the figures quoted by Mr Brook, the full reduction of £8,320 (16 per cent of £52,000) would indeed be suffered even if the client stays with Equitable.
Where the non-guaranteed fund is insufficient to absorb the full reduction, then a “notional” reduction is made to the so-called guaranteed fund and only the remaining fund after this notional reduction continues to earn bonus in future (if any part of the fund ever earns a proper rate of return again).
How advisers can advise during this blackout while the regulator wrings his hands and counts his lucky stars that his own sizeable salary, bonus and index-linked pension are not affected by his incompetence is beyond me and, I dare say, most other advisers.
A final point – I have still to receive any response from those newspaper editors that I suggested may wish to consider donating back to the Equitable without-profits fund their not inconsiderable advertising revenue earned by accepting advertisements for new business right up to the death.
Yates & Co