Equitable Life is today expected to win backing for its compromise deal designed to free the insurance society from its legal tangles. KPMG, the accountancy firm, is due to pass the result of this month's policyholder votes on the deal to the board this morning.
Policyholders with guaranteed annuity rates (GAR) in their pension contracts voted on 11 January on whether to sign away those rights for a 17.5 per cent increase in their funds. Other policyholders, without those rights, were voting to receive an extra 2.5 per cent in return for agreeing not to sue the company for mis-selling.
Many have claimed they were not told that the society could not afford to meet the guarantees. But the value of that second vote was thrown into doubt last week, when the High Court ruled that the insurer was "negligent" in selling a policy. The verdict could pave the way for thousands of similar claims from former policyholders, who will not be bound by the compromise deal with remaining members. The next legal actions could be launched within weeks.
Many of the society's 900,000 policyholders have begun taking their pensions earlier, as a way of removing their cash from Equitable without penalty. Thousands more are believed to be preparing applications to take money out, even with the current 10 per cent withdrawal penalty.Reuse content