UK - Equitable Life has clamped down on pension schemes which are taking advantage of preferential exit terms.
The insurer admitted some schemes were using a loophole in group surrender rules allowing many company scheme members to withdraw funds at better rates than individual policyholders.
Equitable Life said: “It became apparent that some individuals within pension schemes were being allowed to use the group approach as the trustees of their scheme were aggregating individual decisions to surrender. This is not the purpose of the group basis and is not fair to other policyholders who do not have such an option.”
Now group surrenders will only be allowed if scheme trustees rather than individual employees make the decision to surrender the entire scheme.This decision follows High Court approval of Equitable’s controversial compromise scheme and the announcement of a large number of group surrenders in the fourth quarter of 2001 – including such high profile schemes as the NHS Pensions Agency which negotiated a transfer rate of only 5% for its members.
Equitable has more than 6000 group personal pension and AVC schemes representing more than 500,000 members and holding around £4bn – nearly 20% – of the society’s funds.
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