Tens of thousands of pensioners who have been trapped in Equitable Life’s ailing with-profits fund for years will come a step closer to leaving the life insurer this week.

Letters are being sent out to members of the beleaguered society calling on them to approve the transfer of Equitable’s £1.8 billion with-profits annuities business to Prudential.

If a majority of policyholders vote yes, and the scheme gets court approval, about 62,000 of them will see their annuities transferred to Prudential by the end of the year.

Charles Thomson, chief executive of Equitable Life, said: “We firmly believe that the transfer will benefit all policyholders . . . Those that are transferring will become part of an actively managed fund, which is one of the largest and strongest in the UK.” Policyholders’ income payments won’t be immediately affected by the transfer: someone receiving £10,000 a year from Equitable will get the same from Prudential.

Once the funds have been moved, the Equitable members will qualify for Prudential’s with-profits bonus payments. These schemes invest in an underlying fund and each year the annuity is adjusted in the light of returns, announced as bonuses.

Equitable’s returns have been poor because most of its with-profits fund is invested in bonds, which are less volatile than shares but have lower growth prospects. At Prudential 70% of the fund is in shares and it has returned an average 10.5% a year since 2001. Eligible members have until October 24 to vote by post, or they can vote at a special meeting in London on October 26.

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