Equitable members vote for rescue plan

Equitable Life policyholders have voted overwhelmingly to accept a crucial compromise deal which will finally bring financial stability to the UK life assurer.

Some 485,000 Equitable policyholders, including up to 25,000 in Ireland, and 6,000 pension fund schemes were asked to vote on the compromise deal which Equitable will use to cap its £1.1 billion sterling (€1.8 billion) of pension liabilities to policyholders with valuable Guaranteed Annuity Rate (GAR) policies. The scheme now goes forward to be approved by the High Court on February 4th.

"This is an important milestone in this society's journey to stability and a better future," said Equitable chairman Mr Vanni Treves. "But we are not complacent as we still have the court process to go through."

Mr Charles Thomson, chief executive, said there were no plans to increase the 10 per cent exit penalty for those wishing to leave even though the mutual could now face a mass exodus of policyholders following the verdict.

Policyholder groups welcomed the vote. Mr Ron Bullen, chairman of Equitable Policyholders Action Group, said: "I think people will be pleased that there is an end to the instability. A No vote would have been a disaster and there is less chance of an exodus from the fund now. Our priority from now on will be to focus on compensation from third parties like the former advisers."

Equitable said 98 per cent of GAR policyholders by policy value had supported the deal. Among non-GARs, support was even higher with 99.2 per cent in favour and 99 per cent voting to give up potential claims for mis-selling. The scheme needed to be agreed by 75 per cent of those voting by policy value and 50 per cent by number. Mr Treves said the scheme had to be effective by March 1st to ensure Equitable received a further £250 million from HBOS, the UK bank which bought the operating assets of Equitable last year.

Under the scheme, 70,000 GAR policyholders will get an uplift of 17.5 per cent in their funds' value for giving up their GARs. Others with with-profits investments will receive on average an uplift of 2.5 per cent if they give up their right to pursue legal claims over mis-selling.