Equitable pays annuity claimants

The Equitable was once one of the UK's biggest pension companies

More than 400 people holding with-profits annuities with the Equitable Life have won compensation for being mis-sold their policies.

The pension provider, which nearly went bust in 2000, has settled a High Court action brought in 2004 on behalf of 407 policy holders.

The terms of the settlement are confidential, but lawyers for the claimants said they were delighted.

The with-profits annuity business has since been moved to the Prudential.

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The Equitable closed to new members in 2000, when its management lost a crucial High Court case that plunged the society's finances into crisis.

We are pleased to have removed another uncertainty from the business on behalf of our policyholders

Equitable Life

It meant they had to pay out much more money than they had set aside to a group of policyholders who held guaranteed annuity rate policies.

Since then, the Equitable has shrunk dramatically, with chunks of the company being sold off and past and present management being embroiled in a series of legal actions.

Robert Morfee, the partner at legal firm Clarke Willmott who represented the claimants, said: "The claims were exceptionally complex and involved a detailed analysis of a very intricate financial product and the regulatory process surrounding the advice which must precede the sale of such a product."

An Equitable spokesman said: "We are pleased to have removed another uncertainty from the business on behalf of our policyholders."

Annuities

The with-profits annuities were pension policies in which the policyholders' money continued to be invested in the Equitable's with-profits fund, even after retirement.

This fund was once largely invested in shares.

Since the near-collapse of the society, the fund has been invested mainly in much safer but much lower-yielding bonds, which has meant a big reduction in the pensions being paid out.

Originally, 879 policy holders were interested in suing the Equitable.

They claimed they had not been told the true risks of the policies when they were sold to them by Equitable staff between 1990 and 2000.

Some annuity holders dropped out, daunted by the potential cost of losing the legal claim, and some have died in the meantime.

A spokesman for the Equitable said there were no outstanding legal actions against the society, although the Parliamentary Ombudsman has still to publish her second report into the affair.