Equitable life
The Cabinet Office continues to monitor developments with the help of the
scheme’s financial advisors, Hewitt, Bacon and Woodrow, and update members
of developments on a regular basis. Further information about Equitable
Life is available from your scheme administrator and information and from
this site.
4 July 2007: Withdrawal of Equitable Life additional death in service cover
The Equitable Life additional death in service cover allows you to increase
the lump sum payable on your death to a maximum of 4 times your salary.
Contributions are subject to full tax relief at the highest rate you pay.
Following the 2007 budget the Chancellor announced the Government’s
intention to remove tax relief for Pension Term Assurance (additional life
cover) on any new policies taken out on or after 29 March 2007. Equitable
Life have decided not to offer this cover as part of the CSAVC scheme in
the future.
What does this mean to me?
If you currently contribute to an Equitable Life Additional Death in
Service policy and are under scheme pension age (60):
You can continue to contribute and you will continue to receive tax relief
on those contributions. However you will not be able to increase the
level of cover or extend the term of the contract beyond the current term
(Age 60). This means that your additional death in service benefits will
not increase as your salary increases.
If you currently contribute to an Equitable Life Additional Death in
Service policy and are over scheme pension age (60):
If you are over 60 and are contributing to an additional death in service
policy the term of the contract is revised at the anniversary date, which
for over 60’s, is 6 April. This means the Equitable Life additional cover
will stop immediately. Equitable Life should tell you that the
contract has stopped. If deductions are still being made from your pay you
should contact your payroll/HR department.
What if I applied to make additional contributions after 29 March?
Your application will not be valid. Any contributions you have made
so far will be repaid by Equitable Life in full.
If you are considering making contributions for additional life cover:
This is no longer available under the CSAVC scheme. Equitable Life have
stopped accepting any new contracts for additional life cover since 29
March 2007.
21 December 2006: Transfer of non-profit pension annuity business to Canada
Life
Equitable Life announced the transfer of some of its non-profit pension
annuity business to Canada Life in 2006 and this includes the non-profit
CSAVCS annuities. We would like to assure you that if your Equitable Life
CSAVC annuity is transferred to Canada Life it will not affect the payment
of your CSAVC pension annuity nor will it affect the Minister's
guarantee on your annuity. This means that if for any reason Canada
Life fail to pay your CSAVC pension annuity the Civil Service will continue
the payments on their behalf. If you have a CSAVC with Equitable Life
and have not yet drawn your CSAVC pension benefits this transfer will not
affect you in any way.
11 October 2004
Cabinet Office, as manager of the Civil Service pension arrangements, asked
all unit-linked and building society investors to consider whether to
transfer their unit linked building society assets to an alternative
provider. A bulk transfer took place in December 2004 and Equitable Life
was closed to new investors, except for life assurance cover.
22 June 2004
The results of the Penrose Inquiry were published in March 2004. Lord
Penrose’s key conclusions were:
-
Equitable Life itself was the main cause of the problems that have
arisen.
-
Regulatory system failures were secondary factors.
Lord Penrose made no recommendations for the payment of compensation to
policyholders. He made no allegation of maladministration or of negligence
against the regulator(s).
Ruth Kelly, the Financial Secretary to the Treasury, made a statement to
Parliament in response. She made a number of announcements including a
proposed review of Equitable Life to see whether Lord Penrose’s findings
should have any current impact on its management. Along with this, a
reminder of a number of measures that have been implemented in recent years
to improve regulation of insurers and plans for reviews of the running of
mutual insurance companies and the actuarial profession. She also commented
that it is for the Serious Fraud Office and the DTI to decide whether any
prosecutions should follow Lord Penrose’s findings.
13 November 2003
You will be aware of the difficulties suffered by Equitable Life over
recent years. As it has been some time since the last notice updating
members on events, the Managers of the CSAVC Scheme
asked Hewitt, Bacon & Woodrow, the Scheme Advisers to provide a
summary of the current position for the benefit of members. [PDF 28KB]
Equitable Life will be delaying this year’s annual benefit statements, and
re-issuing those that they have already sent, due to an error with the
newly introduced Statutory Money Purchase Illustrations (SMPIs).
1 July 2002
With effect from 1 July 2002, Equitable Life’s Market Value Adjustment
(MVA) for transfers from the ‘with profits’ fund has been set at 20%. Also
with effect from 1st July 2002, the maturity value adjustment has been set
at 10%.
25 September 2002: Summary of the Equitable Life (EL) Situation
We aim to keep CSAVCS members, and anybody else who is interested up to
date on any changes to EL’s position. We have drawn up a brief history of
the events so far that have gained much press attention.
-
Summary of the Equitable Life (EL) Situation
Background
From the 1950s up to 1988, Equitable Life issued with-profits policies
which gave the policyholder the option to take an annuity at a guaranteed
annuity rate (‘GAR’) rather than at the rate available on the open market.
The CSAVCS came into being in 1989 and therefore no members hold GAR
policies through the scheme.
To meet the costs of the GAR policies, Equitable Life awarded lower final
bonuses to GAR policyholders who took annuities at the guaranteed rate
compared to those who chose not to. Some GAR policyholders mounted a legal
challenge against this practice.
The House of Lords Judgement
In July 2000, the House of Lords ruled that Equitable Life could not
differentiate in this way. Equitable Life then set aside £1.5 billion,
which they estimated was the cost of meeting the GAR liability. To meet
this cost, they reduced the policy values of with-profits policyholders. As
the actual cost of the GAR policies could be more or less than the
estimated cost, the possibility of having to reduce policy values further
remained.
In July 2000, Equitable Life put their business up for sale. In December
2000, they announced that they were closing to new business.
The Halifax deal
In February 2001, the Halifax Group bought Equitable Life’s business, with
the exception of the with-profits fund. Halifax agreed to contribute £250
million to the with-profits fund if Equitable Life could reach a compromise
agreement with with-profit policyholders on the future of the fund. In July
2001, Equitable Life reduced policy values by 16% due to falls in stock
markets and the fact that maturity values of policies were exceeding the
value of the underlying investments.
The Compromise Scheme
Against this background, Equitable Life proposed a compromise scheme. The
main features of the proposed compromise scheme were that
-
GAR policyholders would give up their rights to annuities at guaranteed
rates in exchange for an average increase of 17.5% in their policy values
-
non-GAR policyholders would give up any rights to claim against Equitable
Life relating to the cost of the GAR policies in return for an increase
of 2.5% in their policy values.
98% of policyholders voted in favour of the compromise. Equitable Life had
to seek the High Court’s permission to proceed. The High Court gave
approval in February 2002 to the compromise deal. Mr Justice Lloyd
commented at the hearing:
‘I’m in no doubt that it is a scheme such as an intelligent and honest
man...might reasonably approve’.
The Penrose Enquiry
The Government set up an independent inquiry, under Lord Penrose, into
Equitable Life. The inquiry examined the circumstances and history leading
to the current situation at Equitable Life and identified lessons to be
learned for the conduct, administration and regulation of life assurance.
The results of the Penrose Inquiry were published in March 2004. Lord
Penrose’s key conclusions were:
-
Equitable Life itself was the main cause of the problems that have
arisen.
-
Regulatory system failures were secondary factors.
Lord Penrose made no recommendations for the payment of compensation to
policyholders. He made no allegation of maladministration or of negligence
against the regulator(s).Lord Penrose made no recommendations for the
payment of compensation to policyholders. He made no allegation of
maladministration or of negligence against the regulator(s).
Ruth Kelly, the Financial Secretary to the Treasury, made a statement to
Parliament in response. She made a number of announcements including a
proposed review of Equitable Life to see whether Lord Penrose’s findings
should have any current impact on its management, a reminder of a number of
measures that have been implemented in recent years to improve regulation
of insurers and plans for reviews of the running of mutual insurance
companies and the actuarial profession. She also commented that it is for
the Serious Fraud Office and the DTI to decide whether any prosecutions
should follow Lord Penrose’s findings.
20 May 2002
This notice:
-
provides information to CSAVCS
members of Equitable Life’s with profit fund and to those who recently
participated in the bulk surrender options exercise and transferred their
with profit investment from Equitable Life; and
-
advises on the current position regarding the security of CSAVC
investments in the Equitable Life’s unit-linked funds and Building
Society Pension Fund.
With effect from 15th April 2002 Equitable Life’s Market Value Adjustment
(MVA) for transfers from the with profits fund, has been set at 14%.
Latest news (19 February 2002) [RTF 21KB] This notice confirms that the High
Court approved Equitable Life’s compromise scheme, effective from 8th
February 2002. It also provides an update on the progress of the bulk
surrender.
31 January 2002 (Deadline for action 7 and 14 February 2002) [RTF 100KB]
This notice:
-
Updates members who have investments under the CSAVC Scheme
with the Equitable Life’s ‘with profits’ fund on the outcome of voting by
policyholders on the compromise scheme put forward by Equitable Life.
-
Reports on the availability of a further option for members to transfer
their investment in the with profits fund under what are known as bulk
transfer terms. Please note that members who wish to participate in the
bulk surrender must take immediate action, as outlined in paragraphs
[5-26].
-
Provides further information for those CSAVC members
with investments in the Equitable Life range of unit linked funds and
building society fund.
9 January 2002 - Guaranteed annuity rate (GAR) compromise scheme
[RTF 96KB]
This notice provides important information to former staff that preserved
their benefits in the PCSPS on leaving and who
also have investments with Equitable Life made under the Civil Service
additional voluntary contribution scheme. The deadline for the return of
forms was 12 noon 29 January 2002.
21 December 2001 - Civil Service additional voluntary contribution scheme
Equitable Life - deadline for return of forms was 12 noon 17 January
2002 [RTF 117KB]
The Equitable Life’s guaranteed annuity rate (GAR) compromise scheme.
29 October -2001 Equitable Life model office notice [RTF 52KB]
The Equitable Life’s guaranteed annuity rate (GAR) compromise scheme.
20 September 2001 - Equitable Life model office notice [RTF 13KB]
Includes information on an increase in the rate of Market Value Adjustment
(MVA) imposed on transfers from Equitable Life’s ‘with-profits’ fund.
5 September 2001 - Equitable Life model office notice [RTF 68KB]
This notice, which has been prepared in consultation with our independent
financial advisers, Bacon and Woodrow, and with input from Equitable Life,
provides more information to members. It includes a question and answer
sheet and a ready reckoner issued by Equitable Life to enable members to
estimate the revised value of their fund. In addition, a table providing
some general pointers about the upsides and downsides for those considering
transferring their existing AVC fund out of Equitable
Life’s with-profits fund is available.
3
August 2001 - Equitable Life update [RTF 31KB]
Important changes that affect AVCsinvested in the Equitable
Life ‘with profits’ fund.
Bacon
and Woodrow report to the Cabinet Office. [RTF 268KB]
Members who choose to remain with Equitable Life should fill in this
pro-forma.
19 July 2001 - CSAVC scheme model office notice [RTF 22KB]
1 March 2001 - Open letter to policyholders from the new Chair of Equitable
Life. [RTF 14KB]
This letter sets out ideas and direction from the new Chair of Equitable
Life.
21 February 2001 - model office notice [RTF KB]
This notice contains further details following the announcement that the
Halifax Group plc has purchased Equitable Life.
29 January 2001 - CSAVC - Equitable Life - latest news [RTF KB]
This notice provides details of the potential sale of Equitable Life.
15 December 2000 - CSAVC - Equitable Life - latest news [RTF KB]
This notice provides an update to the recent events involving Equitable
Life and actions that are being taken.
