Equitable Life and Friends Life update - November 2011
Equitable Life
Following the release of the Preliminary results for 2010 on 28 March 2011, Equitable Life has provided an update on the With-Profit Fund's financial position, investment strategy and the resultant bonus declarations.
As part of this, Equitable Life has announced its intention to pass some of the capital it has held back to ensure its solvency, to policyholders for policy values and enhancements to payouts. Equitable Life has confirmed that:
- The policy values at the end of 2010 will be unchanged from the 2009 values.
- Any policies in force as at 1 April 2011 will receive an increase in policy value of 2.0% per annum which will be backdated to 1 January 2011.
- For members who leave the With-Profits Fund (through transfer, retirement or death), a sum equivalent to 12.5% of policy values as at 31 December 2010 has been identified to enhance payments made after 1 April 2011.
- The level of enhancement is not guaranteed and may go up or down in the future and payment will be adjusted or removed without notice.
- The Market Value Adjustment (MVA) of 5% will continue to be applied to policies which leave in non-contractual circumstances, such as transfers out.
How will the enhancements to payments be calculated?
The impact of the proposed 12.5% payout depends on the circumstances in which the member leaves. This is calculated as the surrender value or transfer value of your with-profits benefits (this can be found in your annual Benefit Statement issued by Equitable Life) which is the value of the policy at the end of 2010. From April 2011, £125 will be added for every £1,000 of that policy value.
Although Pensions Trust is unable to give investment advice, members should be aware that the uplift and, if relevant, the MVA are applied to the policy value, but not the notional value of guaranteed benefits. The guaranteed value maybe either higher or lower than the policy value and members may wish to take this into account when making any decisions.
How often will Equitable Life review or amend the enhancement?
Equitable Life expect to review this at least once a year and the enhancement cannot be guaranteed. The amount available will be reviewed in the light of market conditions. Payments will be adjusted or removed to ensure that the solvency of the With-Profits Fund is maintained at a level that continues to meet regulatory requirements.
Friends Life
The Market Value Adjustment (MVA) for all withdrawals (before retirement) from Friends Life has been removed since September 2009. This may be reinstated in the future.
Where can I get advice?
IBM Pensions Trust is unable to provide members with financial advice. You can find a list of Independent Financial Advisors in your area at www.unbiased.co.uk.
IBM Pensions Trust does not recommend any sites or companies listed on the results pages provided by www.unbiased.co.uk and cannot be held responsible for the content of any external sites.
How do I transfer out?
You can download an Equitable Life and /or Friends Life Disinvestment form by clicking here. The form must be returned to: Pensions Services, IBM UK Pensions Trust Ltd, PO Box 41, North Harbour, Portsmouth. PO6 3AU.
Once the form has been received, Pensions Services will arrange the disinvestment of your Equitable Life or Friends Life policy for you.
If you do have any questions please call 023 9256 8164 or send an e-mail to pensions@uk.ibm.com.
David Newman
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Last Updated: 18/05/2012
