ANNUITANTS AND THE RECTIFICATION SCHEME

Letter from Peter Butler - 5 January 2004

As a With Profits Annuitant (since 1994) and also subject to a Review under the Rectification Scheme, I am writing to seek out any fellow sufferers who would like to exchange views and or pool ideas on the way their case is being handled by the Society.

I acquired an Equitable Pension Policy in 1978 into which monthly contributions were made by both Employee and Employer. The retirement date was 1994 by which time the fund was still not big enough to provide maximum benefits. Additional  external funds were therefore added to the “cashed in” value of the Equitable Fund and an Annuity was purchased from the Society.

I relied upon the local Equitable Representative for advice and guidance and was recommended to buy a With Profits Annuity. Then I was under the impression that I had a choice between a With Profits Annuity and a “Conventional” fixed Annuity, not realising that my policy was in fact a GAR Policy with the famous Sixth Schedule giving the Guaranteed Annuity Rates applicable to various ages. I believe now that those rates were in fact slightly higher than the “Conventional” rates then being offered generally in the market.

Subsequently I learned from the local Equitable Representative (now employed elsewhere) that he was also unaware at the time that my policy included Guaranteed rates.

Three years ago the Society informed me that my policy was in one of the classes that would qualify for a Review under the Rectification Scheme, and recently they have said that it will be reviewed sometime in 2004.

In the short term the With Profits Annuity yielded good results but now the situation is dire and with hindsight it is obvious that had I been given the full insight into the Society’s potential black hole and the offer of a Guaranteed Annuity then I would of course have chosen the Guaranteed rather than the With Profits Annuity.

In advance of these reviews the Society are making sinister sounding comments that they will not allow Annuitants the advantage of changing their investment decisions with the benefit of hindsight. This however begs the question of whether the decisions were made with full disclosure of all the relevant and important facts by the Society.

There may well be many other Annuitants in a similar predicament and it might be beneficial for us to pool ideas and possible actions if we feel that we are not being fairly “reviewed”.

Peter Butler pdbutler@ntlworld.com