Equitable Life enhancing benefits

Transcription

1 Equitable Life enhancing benefits The Scheme has some members who, in the past, paid AVCs to Equitable Life. If you are one of these members you may wish to read on. Background Equitable Life wrote to the Trustees recently to advise that it will enhance payments for withprofits policyholders by 12.5%. Equitable Life say The Society has been looking at how we can get into policyholders hands some of the solvency capital that we hold. From 1 April 2011, whenever policyholders are quoted with-profits values, the 12.5% enhancement will be included. Therefore, your next benefit statement will show the value of your Equitable Life fund including the enhancement. In intouch (July 2011 edition) the Trustees highlighted the following: Equitable Life have stated that the amount of this enhancement could go up or down in the future and the only way of guaranteeing that you receive it is to transfer your benefits out of Equitable Life by the end of March 2012 (although it is hoped to maintain the enhancement beyond then). Some policyholders may be better off transferring out of Equitable Life at this time but some policyholders could do worse by transferring out. The decision needs to be considered at an individual level and will depend on, amongst other things, the amount of time to your retirement, the level of penalty imposed by Equitable Life and your attitude to investment risk. We strongly recommend that you do not take any action before taking independent financial advice about what is the best course of action for you. Further information Equitable Life have provided some more information about the enhancement and how the with-profits fund is managed. The following information is set out below: Announcement issued by Equitable Life Questions & Answers issued by Equitable Life Equitable Life: A guide to how we manage the with-profits fund It should be noted that the Trustees are simply sharing information provided by Equitable Life. They recognise that some policyholders may be better off transferring out of Equitable Life at this time but some policyholders could do worse by transferring out. The decision needs to be considered at an individual level. The Trustees cannot give any guidance on what is the best course of action for you to take. Information sheet Equitable Life

2 It has been reported that members who transfer benefits out of Equitable Life will not lose the right to compensation (if any) being paid through the Equitable Life Payment Scheme (reported in intouch - July 2011 edition). However, this has not been confirmed by Equitable Life or the Government). Announcement issued by Equitable Life in March 2011 The Society has been looking at how it can get into your hands some of the solvency capital that it holds. It is important to have some rainy day money, of course, which is what solvency capital is. But it is also important that with-profits policyholders leaving the Society receive their fair share of capital, provided there is enough left for those who remain. So, from 1 April 2011, the Society has earmarked a sum equivalent to 12.5% of policy values at 31 December 2010 to enhance payments for with-profits policyholders who leave the Society. From 1 April, whenever you are quoted values from the Society, the new enhancement will typically be included. The amount of the enhancement may go up or down in the future. That may happen if, for example, investment condition change significantly, or if a change is needed to maintain fairness for all policyholders, or if the Society decides it needs to hold more capital. The more capital the Society holds, the better the shield it provides against changing circumstances. What the Society wants to do is get the balance right between the size of the shield and making sure you receive a fair share of this rainy day money. With-profits policies have a guaranteed benefit which is the minimum amount payable on maturity, death or at a time specified in the policy. That guaranteed benefit is not affected by the enhancement. Questions and Answers provided by Equitable Life in March 2011 Q. Will all my benefits be increased by 12.5%? A. Your benefits will only be increased in respect of your Equitable Life with-profits policy value at 31 December If you have unit-linked benefits or use the Clerical Medical funds or deposit fund, these will not be affected. Q. Will this enhancement be shown on my next benefit statement? A. Any statements showing the value of your benefits after 31 March 2011 will typically include the enhancement. Q. When you pay out my with-profit benefits, will this enhancement be added to them automatically? A. Yes, the enhancement is automatically added to policy values whenever they are paid out. Information sheet Equitable Life

3 Q. Does this enhancement mean my pension fund on retirement will be increased by 12.5%? A. The enhancement is added to your policy value when the fund is paid out. It does not affect the guaranteed value of your with-profits benefits. On retirement the higher of (a) the policy value with enhancement and (b) the guaranteed value of your with-profits benefits is paid. Q. Is the 12.5% enhancement certain to be paid? A. The amount of the enhancement may go up or down in the future. That may happen if, for example, investment conditions change significantly, or if a change is needed to maintain fairness for all policyholders, or if the Society decides it needs to hold more capital. The more capital the Society holds, the better the shield it provides against changing circumstances. What the Society wants to do is get the balance right between the size of the shield and making sure you receive a fair share of this rainy day money. Q. What is solvency capital? A. Solvency capital is money the Society sets aside from the fund to provide a shield against changing circumstances. Please note: The Trustees cannot give you financial advice. It is recommended that you take independent financial advice before taking any action. Information sheet Equitable Life

4 Appendix 1 - Equitable Life: A guide to how we manage the with-profits fund Information sheet Equitable Life

5 Information sheet Equitable Life

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8 Information sheet Equitable Life