Civil_Service_Pensions

Equitable Life Frequently Asked Questions

For members with with-profits investments

Q. How do I find out how much my Equitable Life fund is worth?

A. You will need to contact your Civil Service pension administrator (APAC). To find out who your APAC is, To find out who your APAC is, visit our helpline pages.

Q. Should I move my funds?

A. Under the Financial Services and Markets Act 2000 we cannot tell you what to do with your Equitable Life AVCs. Please read our letter and the update to the Scheme Managers from Hewitt Associates Financial Services Limited (Hewitt) carefully. It is important to be aware that a particular course of action for one person might not be right for another. If you still do not know what is best for your circumstances, you should consider seeking Independent Financial Advice. If you do not have a financial adviser but would like to find one, the following organisations can help:

Association of Independent Financial Advisers (020 7628 1287)

• IFA Promotions (0117 971 1177) can give you a list of three independent financial adviser local to your area
• If you belong to a trade union they may offer financial advice to their members

You may have to pay a fee to an IFA, if you use his or her services.

Q. Will my employer (or the Cabinet Office) pay for my independent financial advice?

A. The Cabinet Office has already commissioned Hewitt for an update on the current situation and will not pay for independent financial advice

Q. Is my money going to be any safer with Scottish Widows or Standard Life?

A. As managers of the CSAVC Scheme, the Cabinet Office monitors all providers to ensure their ongoing suitability. As with any choice of investments no one can predict which will offer the better return. When comparing any investments in Equitable Life with another AVC choice, it is necessary to decide which investment is most suitable for an individual’s needs. If you are not happy with the choice of CSAVC Scheme providers you can transfer to a Free Standing AVC (FSAVC). However, please be aware that the charges imposed by the CSAVC Scheme providers are likely to be less than those imposed by an FSAVC provider.

Q. Can I just cash in my CSAVC?

A. No, the purpose of making AVCs is to ‘top-up’ your pension. The rules of the CSAVC Scheme have to comply with HM Revenue and Customs regulations. These require you to use your fund to buy an annuity – a pension for life – which is on top of your Civil Service pension. You are also able to take up to 25% of your AVC fund as a lump sum.

Q. Am I going to lose money by transferring my fund?

A. Equitable Life will impose a financial adjustment to your with-profits fund if you transfer to another provider (but not on payouts on retirement or death). The financial adjustment rate currently stands at 11.1%. This means that only 88.9% of your policy fund value will be transferred to your new provider. Please note that Equitable Life has the right to change this figure without notice at any time.

Q. I am contributing to Equitable Life for additional life assurance cover – how is this affected?

A. Life assurance cover is unaffected by our recent update. Equitable Life continues to provide additional life assurance cover for civil servants.

Q. I have with-profits AVCs with Equitable Life – why haven’t you organised a bulk transfer for my funds like you have for unit-linked investments?

A. A. The recent update on the position of unit-linked and building society investments with Equitable Life is a change from our previous update. This is why we are offering members the chance to take part in a simplified transfer. We provided with-profits members the opportunity to participate in a bulk transfer in 2002. Of course, you can transfer your with-profits AVCs at any time if you wish. Just contact your APAC in the first instance.

Please note: the amount Equitable Life transfer to a new provider can be less than the amount Equitable Life guarantee to pay out in the event of your retirement or death. This is explained in greater detail on page 4 of Hewitt’s update. Furthermore, on a transfer to another provider (but not on payouts on retirement or death) Equitable Life will impose a financial adjustment to your fund. The financial adjustment rate currently stands at 11.1%. This means that only 88.9% of your policy fund value will be transferred to your new provider. Please note that Equitable Life has the right to change this figure without notice at any time. The guaranteed value of your policy increases each year at a guaranteed rate of interest of 3.5%. This guaranteed interest will be lost for the future if you transfer to another provider.

Q. But this is the first I’ve heard about the bulk transfer offered to Equitable Life with-profits members – why?

A. The bulk transfer exercise run in January 2002 was promulgated by way of Office Notices issued by employers.

Q. Are you going to replace Equitable Life as a CSAVC Scheme provider?

A. No. Unlike many other occupational AVC schemes, the CSAVC Scheme already offers a choice of provider, Standard Life or Scottish Widows. You also have the choice of purchasing ‘added years’ in the PCSPS. And PCSPS members can also ‘top up’ their pension through the designated stakeholder pension provided by Standard Life.

Contact your APAC for further information on top-up options.

Q. Does any of this affect my Civil Service pension?

A. No. Your Civil Service pension is separate from your AVCs. Only the contributions you have made to Equitable Life (to supplement your main Civil Service pension) are impacted by the events at Equitable Life, and the recent update in our letter.

Q. What about former civil servants who have used their CSAVC funds to buy pensions with Equitable Life?

A. This exercise does not affect former civil servants who have used their CSAVC funds to buy annuities with Equitable Life.

Q. If I transfer out of Equitable Life and policy holders are later awarded compensation will I lose out?

A. We do not know what the outcome of the Parliamentary Ombudsman review (and any other action intended to get compensation will be) but will keep members informed if things develop. It is possible that if any compensation or other payments are received they will be paid into the Equitable Life With-Profits Fund for distribution to the remaining investors or it is possible that all previous With-Profits Fund policyholders affected by recent events could be eligible for a payment.

Q. I am over 60 but haven’t yet taken my annuity. If I decide to delay taking my annuity and transfer to another CSAVC provider instead will Equitable Life apply the financial adjustment (11.1%)

A. Yes. Equitable Life will apply the financial adjustment to any fund transferred out regardless of age. They will not apply the financial adjustment for those who opt for the open market option when taking their annuity.

Q. I have already retired but have not yet taken my annuity, can I still transfer my benefits?

A. The option to transfer is still available to those who have already retired. In order to take full account of your personal circumstances, it is recommended that you seek independent financial advice before making a decision.

Q. If I leave my fund with Equitable Life and it becomes insolvent, what will happen to my money?

A. The Financial Services Compensation Scheme (FSCS) would take effect. The FSCS is part of the Financial Services and Markets Act 2000 and its provisions are that policyholders receive 100% of the first £2000 of a claim and 90% of the excess over £2000.