What are the details of the plan?

Under the proposals, 70,000 policyholders with guaranteed annuity rate pensions (GARs) would get a 17.5% increase in their policy values, but they must sign away their rights to a guaranteed annuity rate.

Equitable's larger group of policyholders, its 415,000 with-profits pension holders without guaranteed annuities are being offered a 2.5% increase in their plan's value, but must give up their right to sue Equitable over mis-selling.

Do I have to vote on it?

It is only a draft scheme. Once Equitable has received feedback from members it wil draw up the final deal, which will be sent to members in November. Policyholders will then be required to make a decision.

Did policyholder groups welcome the plan?

A mixed reaction was given to the compromise deal by policyholder action groups.

Liz Kwantes, of the Equitable Members Help Group, said: "We do not really have any choice, I think it could be melt down if it's not accepted.

"There's a feeling that it is almost a Hobson's choice. If we want to get any stability back people will have to accept a real compromise."

Paul Braithwaite, chairman of the Equitable Members' Action Group, said that his group wanted to see the figures behind the proposed deal.

Why is the deal so crucial?

The current uncertainty would continue and the company could face years of legal disputes over potential mis-selling.

Resolution of the crisis would also mean that Equitable could open up to new business once again and thereby improving the chances of future solvency.

Crucially, acceptance of the compromise deal will ensure that Halifax will put at least �250m into the company.

What support is needed for the deal to go ahead?

It will be an uphill struggle for the deal to go ahead - and an enormous task now faces the Equitable board to convince policyholders.

This is becuase the scheme needs to be approved by 50% of both types of policyholder, and representing at least 75% of the value of both types of policy, for it to go ahead.

What rests on the compromise deal

Halifax has already acquired Equitable Life's sales force, computer and administrative systems - all of which are market leaders.

The second part of the deal will only go ahead if the Equitable Life with-profits policy holders vote in its favour, and if some key sales and profits targets are met in 2003 and 2004.

Subject to both these conditions being met, the Equitable Life will receive another �500m from Halifax.

The with-profits policy holders would remain independent from Halifax, but fund management would also be taken care of by Clerical Medical.