Am I entitled to vote on the transfer of with-profits annuity policies to Prudential?

All eligible members of the Society will be able to vote on the transfer. The voting rules are set down in the Society’s Memorandum and Articles of Association and are the same as those which apply at each year’s Annual General Meeting.

We will let members know if they can vote when we issue the voting packs, probably in September.

You can also find out if you are a voting member of the Society by calling our special helpline 0800 408 0097.

Why should I vote in favour?

Equitable Life has greatly improved its strength and your policy benefits are more secure than they have been for many years. However, with much tougher regulatory standards now in place our investment freedom remains limited. Most of our with-profits fund has to be held in fixed interest investments. Although these investments give us security, they limit the with-profits fund’s potential for earning high investment returns and bonuses. Equitable Life’s Board has been looking for a strategic option which could free up this restriction on investment and offer greater bonus earning potential to our policyholders.

If you have a with-profits annuity policy: When you bought your with-profits annuity you were investing in a broadly based investment fund which was actively managed. Equitable Life can no longer invest in that way. If you want your annuity to be part of a large, strong, actively managed fund with much greater investment freedom and the potential to earn higher bonuses, then the proposal to move your annuity to Prudential should be attractive to you.

If you have a different type of with-profits policy: It is important to realise that the with-profits annuities are a relatively unusual product and this limits the appeal of the Society’s business to most third parties. If you want the Board to find an attractive strategic option to deal with the investment restriction for your policy, then enabling the with-profits annuitants to transfer away from the Society will make that more likely.

What happens if there is a no vote?

If the Society’s members do not approve the transfer it will not happen. The Society will continue to manage all the policies itself until the business runs off.

Will the performance of my funds improve after the the move? Will my bonuses increase?

If you have a with-profits annuity, then, historically, broadly based actively managed investment funds like Prudential’s have done better than funds heavily committed to fixed interest investment. Over the medium term that is what most experts would expect and that is the most important reason why we agreed to put forward the proposal from Prudential. However, because of the risks of equity investment there can be no guarantees that Prudential’s investment returns will always be greater and it is possible that investment returns, and therefore, bonuses, could be lower than if the funds had remained with Equitable Life.

If you do not have a with-profits annuity, then you will remain with Equitable Life and the transfer will not materially affect the investment strategy and the bonus earning power of the remaining funds.

Will I receive an extra bonus if the deal goes ahead?

There might be a special bonus for with-profits annuitants if the transfer completes. However, it is not expected to be significant and we think the proposal would be right for with-profits annuitants even if there is nothing available as a special bonus.

Equitable Life is a mutual Society so, to be fair, it is appropriate that the with-profits annuitants should take their share of the Society’s with-profits fund with them to Prudential. However, the with-profits annuitants’ share of the Society’s with-profits fund is likely to be a little more than Prudential needs to take on the annuity business. Some of the excess will be used to cover certain costs in the deal, but if there is anything left it will be passed on to annuitants as a special bonus addition to their policies. The exact figures will not be known until after the accounts are completed following the transfer. We hope to complete the transfer itself at the end of the year.

Will Prudential increase the charges on my with-profits annuity after it transfers?

No. Prudential has committed to maintain expense charges for these with-profits annuities at the level currently levied by Equitable Life. This is an important safeguard for our with-profits annuitants.

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