2 November '02 GAR Rectification

Paul Braithwaites posting to Motley Fool (Click here for the original):

Despite promises of a response in September on just what is happening, nothing has been forthcoming from ELAS. There's a very good, comprehensive article in today's Times by Antonia Senior. Click here for the original or see below for extract

"Two-year delay for Equitable pensioner.

Our correspondent reports on the battle one man has had to get a firm figure for his pension.

JEREMY HORNSBY, a 66-year-old writer, has been waiting for more than two years for Equitable Life to make up its mind about what his pension should be. Mr Hornsby is one of 90,000 Equitable Life policyholders with guarantees attached to their policies. All were offered a reworking of their pension payments when the House of Lords ruled that the company should honour its promises to them. He is still waiting for his share of the £200 million set aside for the “rectification scheme”, the review designed to compensate holders of guaranteed annuity rates (Gar) for practices deemed inequitable by the law lords.

If policyholders have lost income in the past by taking the wrong retirement option, Equitable may give them a lump sum. It may also boost future pension payments. But the delay in carrying out the review has left Equitable pensioners in limbo. Independent financial advisers believe that Mr Hornsby is not alone in waiting for redress. But Equitable refuses to disclose how many policyholders are yet to be dealt with, or what the deadline is for completing the rectification scheme. In September 2000 Mr Hornsby was told that he would know what he would receive by November that year. Still waiting in March 2001, he was assured that the rectification scheme would be completed by September 2001. By the end of the year, the deadline had slipped to the end of 2002.

Now Mr Hornsby has been told he will have to wait until the middle of next year. He says: “It makes me very frustrated because when one phones them, there seems to be a perpetual brick wall. They are very polite but nothing gets done. It's like kicking at blancmange.”

Mr Hornsby chose to take a with-profits annuity in 1998, on advice from his Equitable adviser. He believes that his retirement income could be boosted by almost 50 per cent under the rectification scheme. He also wants to ensure that his wife, Jay, a 62-year-old writer, is fully provided for from the policy.

An Equitable spokesman said: “It is taking longer than expected but it's an extremely complicated exercise. The rectification scheme is done on a tailored basis with each policyholder looked at individually. Obviously the society has to be scrupulously careful that the money paid out is paid to those to whom it is due.”

The Equitable spokesman added that further delays had occurred because the company this year decided to review the scheme's progress to ensure that it was now working correctly.

But as the rectification scheme continues, financial advisers have warned policyholders to be sceptical of the offers made by the company. If you are not happy with the offer, you can ask for another.

Stuart Bayliss, at Annuity Direct, the independent financial adviser, said that some of the offers received by his clients have been “misleading”.

He points to one example where a client was offered a new income based on a pension offering his spouse 100 per cent of the pension income on death. On this basis, the client would receive little more under the rectification scheme than he already receives.

Mr Bayliss pointed out that by opting for a pension which pays only 50 per cent to the surviving spouse, the client would significantly boost his future income from the scheme. He urges Equitable policyholders to take advice on their rectification offer before accepting it.

The delays experienced by Equitable policyholders in the rectification scheme are not an isolated occurrence."