Equitable deal gets the go-ahead

EQUITABLE Life has pulled off a stunning victory in the year-long battle to restore its financial stability with the overwhelming majority of the society's 1.1m members backing plans to rid it of potentially crippling liabilities.

The society, which was the pension provider preferred by so many of Britain's well-heeled, said that a string of proposals to lift the value of pensions in return for policyholders giving up many of their rights had been supported by up to 99% of those who voted.

Equitable needed the support of 75% by value of all policyholders who voted and 50% by number. Each proposal was passed by majorities of between 97.3% and 99.2%.

The insurer now needs the High Court to approve the deal by 1 March if it is to secure the additional £250m cash injection promised to it by Halifax as part of an agreement struck by the pair last year.

However, Equitable is still facing litigation from policyholders who believe that they are not bound by the terms of the compromise deal. These include investors who cashed in their policies before the vote.

But finance director Charles Bellringer said he did not believe these outstanding claims had the potential to destabilise the society. 'We have been advised it will be extremely difficult for them to succeed with a claim,' he said.

Under the compromise plan drawn up by Equitable chairman Vanni Treves, those holding guaranteed annuity rate policies (GARs) will receive a 17.5% lift in the underlying value of their policies in return for waiving their rights to guaranteed pension rates. The value of non-GAR policies will be raised by about 2.5% in return for their holders waiving their rights to sue the society for not telling them about its GAR commitments when they agreed to invest.

The compromise deal was widely supported by pension groups and other investor representatives, which said that the society would have suffered crippling instability had it been forced to honour its financial commitments to GAR policyholders.

A five-day court hearing, at which those opposed to the deal can put their case, is due to start on 4 February. Treves said that Equitable would outline its long-term strategy once it had won court approval. He played down speculation that he would quit at that time, saying that he was not known for leaving such situations prematurely and 'there is still a lot to do here'.