Archived decisions

Contact: Chief Pensions Officer [email protected]; 01962-847506

1. Introduction

1.1 At its meeting on 8 June 2005, the Panel approved a report entitled "Pension scheme administration", which included developments at Equitable Life, based on advice given by the County Council's consulting actuaries in May.

1.2 Our actuaries provided a letter to send to with-profits investors to explain Equitable Life's current situation, following the publication of the Society's accounts for 2004 in April. This letter was sent to with-profits investors with their annual benefit statements for 2005. It reminded them of their AVC transfer options. With-profits funds with Equitable Life now are worth £1.9m.

1.3 The Panel was informed that the consulting actuaries also suggested moving unit-linked AVCs to another provider, to avoid becoming more exposed to suffering the effects of litigation against the Society as the with-profits fund shrinks, and that further advice on this would be sought for the Panel.

2. Unit-linked and deposit funds

2.1 Additional advice was received in July, to the effect that there is no compelling reason for retaining the unit-linked investments with Equitable Life and that they should therefore be transferred to an alternative provider.

2.2 A draft letter to AVC contributors was also received, which applies to both unit-linked and deposit fund investors, stating that, "There is a possibility that if Equitable Life becomes insolvent the value of your investments in the unit-linked and deposit funds could be reduced". The unit-linked funds concerned are now worth £1.235m and the deposit funds are now worth £1.175m.

2.3 The letter invites unit-linked and deposit fund investors to instruct the County Council to transfer their AVCs from Equitable Life to an alternative provider, which would be Zurich. The letter then goes on to say that the County Council would transfer their money anyway, if they failed to reply within a month.

2.4 We have not imposed that on with-profits investors, who suffer a penalty if they withdraw money from Equitable Life. A normal "bid-offer spread" applies to unit-linked investment withdrawals. Deposit funds are repaid fully.

2.5 Equitable Life investors will be informed of the risk of not transferring AVCs.

Recommendation

That AVCs invested in Equaitable Life shall only be transferred with the prior consent of the individual investor.

Section 100 D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB the list excludes:

Published works.

Documents which disclose exempt or confidential information as defined in the Act.

None.