Equitable deals another blow to investors
UK – Troubled mutual life company, Equitable Life Assurance Society, has raised the early exit penalty for customers wishing to withdraw their pensions assets from it with-profits fund from 14% to 20%.
Moreover, the society will henceforth take 10%, opposed to 4%, off the maturity value for policyholders choosing to take benefits, unless this takes it below the guaranteed value.
Equitable Life claims the changes are “most regrettable” but necessary and blames the changes on the decline in the equity markets, continued market volatility and the likely increases in provisions.
However, the society’s chairman, Vanni Treves, insists the company is solvent and the move is in the best interests of policyholders that remain with them.
“We must ensure that the society remains solvent and that policyholders choosing to leave do not take more than their fair share. We understand this is unwelcome news for those who choose to go now but the board would be failing in its duty if it did not act,” he says.
Equitable Life is not the only pension provider to raise its exit penalties for with profits funds recently, though its increase is the largest. Legal & General increased its maximum penalty to 18% from 16%, though its range starts at 0%.
Scottish Widows’ range also starts at 0%, but its maximum charge went up to 15% from 10% recently, and Norwich Union recently raised its to 5.5%.