Pru 'rescues' Equitable policies by Finance News Bulletin

Published: 08/12/07

The Prudential insurance company has approach to the rescue of 50,000 policy holders with the stricken Equitable existence pension companyUnder the Pru's control these retirement fund policies should benefit from higher investment income in the futurePensioners with these policies saw their pensions slashed after the Equitable narrowly avoided bankruptcy in 2000 when it shut to new business"The suggestion, which will benefit all policyholders, to transfer with-profits pension policies to Prudential is a further major achievement arising from the Society's ongoing review of strategic options," supposed Equitable chairman Vanni Treves

"The board has been very aware of the particular difficulties faced by with-profits annuitants and we are satisfied to have negotiated this excellent proposition for them," he addedThe assets of the policies that are being bought amount to £18bn The pensioners - who grasp 62,000 with-profit annuity policies between them - have an average age of 74

The unique idea behind these policies was that once the customers had in use an annuity - an annual retirement fund - from the Equitable, the income would not be fixed but might riseThey will become part of an vigorously managed fund, which is one of the largest and strongest in the UKThat was because they would benefit from future investment returns as their cash would continue to be put into a broad increase of investments, rather than just in bondsHowever, the financial disaster at Equitable forced the company to cut the payouts on these policies by 20% and change the fundamental investment strategy so that most of the money was invested in fixed-interest bonds after allevenhanded said this destined its customers with these policies faced shrinking cash payouts each year

Now, under the umbrella of the Prudential, the funds can be invested more daringly with the prospect of greater returns and thus higher and rising payouts to the policy holders"They will become part of an vigorously managed fund, which is one of the largest and strongest in the UK," said Equitable leader executive Charles Thomson"It will also help us in the look for for the best strategic solution for the

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