Some of you may recall the demise/downfall of Equitable in the past (Nobody called Goodwin got a knighthood for this foul up). A long court case ensued and the Government was found liable for some measure of the losses incurred by policy holders, in that the FSA had failed to adequately supervise Equitable. Some of the business was taken on by Prudential who did their best with a bad hand; my income halved.
I have just had a letter offering me substantial and ongoing compensation for my losses. If any of you have still got an Equitable with profits annuity you can expect to get a letter containing good news very soon. I am getting 2 year's compensation paid in a lump sum and an ongoing amount, paid annually arrears until I croak. Better than a poke in the eye with a shirty stick which is what my cataract op looks like right now!
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Very pleased for you Meldrew, some good news to cheer up these cold evenings a bit but no more than you deserve under the circumstances.
Where is the compensation coming from if one may be so bold, govt or the Pru?
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I will check my paperwork. The compensation payments are being handles and issued by National Savings and Investments (N&I?) from an office in Glasgow. On the basis that the Government has been found negligent I am supposing that the payments are coming from Central Government funds - sorry! Certainly not the Pru, they took over wreckage of the Equitable train crash.
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Government funds (thats the tax payer) are paying for this.
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"The compensation scheme will make limited payments from June 2011, with an accelerating profile of payments thereafter. The scheduled payments throughout the first year of the scheme will amount to £500m. These will be prioritised so that the eldest policyholders receive their payments earliest. The scheme administrators will make contact with qualifying policyholders with a view to making payments."
1st year is the biggest as they are making payments backdated to the High Court ruling which was 2 years ago. I have received projections of my annual compensation through to 2025. Overall it is a shedload of money as my first payment is about £900 which isn't much out of £500 million. Mind you, lots of people had £1/2 million invested (Judges, QCs and other people with big pension pots.)
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If anyone ever wants an example of why we need Judicial Review and a powerful Ombudsman overseeing government action point to Equitable Life.
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Just under 40 yrs ago I joined a company scheme but did not contribute to the Additional Voluntary Scheme. About 18 yrs ago I was made redundant by them and regretted not making AVCs as the earlier & more you put away the better the payout when the 60/65th (or later) Birthday arrives.
When I retired 5+ years ago I found out the AVC Scheme was with Equitable Life ..............unwittingly a good financial decision for once.
Mind you the Equitable Life were/are BUST - the returns on a Personal and Money Purchase Schemes were very bad from 93 -2006- little or no growth (other than the 40% tax rebate bit) and HIGH Ins charges then poor Annuity Rates.
For Example - £60K put in + £40K from taxman =£100K - supposed to grow to £120K
The £120K @ 9% would have given £10.8K per year
The £100K was £100K +/- @ 6%= £6K per year
ONLY a bit more than half............the Ins Co made money, the Fin Adviser made money so why should I?
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Exactly why private pensions should be seen with suspicion:-
The company, the adviser and then the annuity provider all take a good slice of your proceeds, and any profit you make.
I'd sooner fill up my ISA allowance each year than pay into a private pension - sure there is a loss of tax rebate, but (under present guidelines) the final payout is taxfree unlike the income portion of a pension which is taxable.
The fees/charges associated with an ISA are generally superior to a pension product.
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>>I'd sooner fill up my ISA allowance each year than pay into a private pension - sure there is a loss of tax rebate, but (under present guidelines) the final payout is taxfree unlike the income portion of a pension which is taxable.
I was filling ISA + £500+in Pension/mth employer, £150 / mth Private pension (other earnings) and paying into employer share purchase £250/mth.......since the Kids left Uni and were not dependent saving for retirement aged 52 was top priority.
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I know the long term outlook wasn't good, until I got my compensation statement recently. However I clearly recall that Equitable charged me a £78 fee for setting up my annuity; admittedly it was money I had saved with them, but they were handling over £11.000 and I thought the fee was very fair, expressed as a percentage or however one looks at it.
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Equitable Life with Profits Annuities - -
