Policyholders backing Equitable's scheme

More than eight out of 10 Equitable Life policyholders support most aspects of the compromise proposal the mutual insurer has formulated to stem the society's liabilities and enhance its investment freedom.

More than eight out of 10 Equitable Life policyholders support most aspects of the compromise proposal the mutual insurer has formulated to stem the society's liabilities and enhance its investment freedom.

The finding, drawn from responses by 24,000 policyholders, is the most comprehensive indication yet that the scheme will be passed when it is put to the vote by all with-profit members in December.

Support for the scheme was high across the board, and the lowest approval was for the level of uplift offered to policyholders without a guaranteed annuity rate (GAR). Slightly more than eight in 10 respondents support the proposed average uplift of 2.5 per cent of the value of their fund. Equitable said still higher numbers favour the offer for non-GARs of an average 17.5 per cent increase, with nine in 10 policyholders who have sent letters or e-mails, or who phoned Equitable, saying they backed the level of uplift.

Many non-GARs were initially disappointed when the draft scheme was published a month ago because the offer was less than initial indications that they would receive 20 per cent in return for giving up valuable annuity guarantees, which tend to be 30 per cent higher than annuities available from other providers. But the sample of policyholders suggests the prevailing feeling is that reaching a compromise to cap Equitable's liabilities is vital, with almost 10 out of 10 respondents in favouring. The data does not show the proportions of GARs and non-GARs among respondents, and does not relate to the value of their funds. These details will be important when it comes to the vote, because 50 per cent of both groups by number and 75 per cent by value must ratify the compromise.

But the level of support for the scheme also indicates that it is very unlikely Equitable will adjust its terms when it issues the final proposal late next month. The society had said it was receptive to suggestions for changes and has held 18 meetings around the country with policyholders. But prospects for members who want the level of uplift increased for particular groups, look very unlikely. Equitable has said that with-profits annuitants may get extra help, but only if the compromise is supported. Policyholder action groups remain ambivalent and want Equitable to publish a comparison between policy values and the exact value of underlying assets before backing the scheme.

Vanni Treves, Equitable's chairman, acknowledges that it will still be a tall order to push through the scheme which, if ratified, would also trigger a £250m payment by Halifax banking group into the with-profit fund.