Equitable exit penalty up to 20%

EQUITABLE Life added to the financial misery of its long-suffering members today as it increased the exit penalties for those wishing to cash in their savings early. It raised the financial adjustment for early surrenders from 14% to 20%, meaning policyholders stand to lose a fifth of their savings if they want to get out now.

This is the second such move in as many months. Equitable raised the rate from 10% to 14% in April.

It also slashed the maturity value for policyholders choosing to take benefits by 10%, previously 4%, unless this takes the value below the guaranteed value, in which case that sum will be paid.

Equitable said that although it had reduced its equity holding to 15%, recent market falls have 'significantly impacted the value of the fund'.

It said that it would have to make further provisions to the with-profits fund, partly because of the high costs of outsourcing arrangements 'demanded by the current climate'. Equitable called the action 'entirely necessary, yet most regrettable'.

Equitable chairman Vanni Treves said: 'The society is solvent and we continue to meet our regulatory capital requirements. The board's primary objective is to act in the best interest of continuing policyholders. To do this, we must ensure the society remains solvent and that the policyholders choosing to leave the fund do not take more than their fair share.'