Home > News > 2001 > December 2001 > Equitable Compromise Scheme - Changes from Proposal Document
Equitable Compromise Scheme - Changes from Proposal Document
On 6 December 2001, Equitable Life published the final version of the compromise scheme to be voted on by members. The final version of the scheme mostly mirrors the scheme consulted on at the proposal stage (click here for details) but there are a few changes resulting from the consultation and some further clarification is now provided. The level of compensation offered has not changed from the proposal stage.
Voting Process and Timetable
There will now be three separate meetings instead of two, one for Guaranteed Annuity Rate (GAR) policyholders and two for non-GAR policyholders. The GAR policyholder meeting will be held to allow GAR policyholders to vote on accepting the uplifts to their policy values in exchange for giving up their GAR options. The first non-GAR policyholder meeting will vote on giving the uplift to the GAR policyholders' policy values. The second non-GAR meeting will vote on accepting the uplift to non-GAR policy values in exchange for waiving their right to sue the Equitable for mis-selling.
All non-GAR policyholders can vote at both the non-GAR meetings. Policyholders holding both GAR and non-GAR benefits can vote three times: once as a member of the GAR class of voters and twice as a member of the non-GAR classes.
For the Scheme to succeed, at each meeting a majority of policyholders voting and representing in excess of 75% of the policy values voted must vote for the scheme.
The policy values for voting purposes in the second non-GAR meeting have been weighted according to whether the policy was purchased prior to 29 April 1988 or after that date. Policies purchased prior to 29 April 1988 get a lower weight as the Equitable believes that these have a much weaker case for mis-selling claims.
For group schemes:
- There will be one vote per trustee board.
- Policy values can be split between policies and within one policy. However, trsutees will need to request special forms from the Equitable if they wish to split their vote.
- Where trustee boards hold one or more policies which have both GAR rights and non-GAR rights, they will be able to vote at both the GAR and non-GAR meetings.
- If trustees vote for and against at one meeting, the votes will cancel each other out for the purposes of assessing whether a majority in number have voted for the scheme, but will still contribute to the vote by policy value.
The timetable indicated by the Equitable is:
| Early December 2001 |
Receipt by policyholders of scheme documents |
| 11 January 2002 |
Scheme meetings and vote counting |
| Late January 2002 |
Announcement of results of the class meetings |
| Early - Mid February 2002 |
Court Hearing to sanction the Scheme |
| Mid February 2002 |
Scheme becomes effective |
| 1 March 2002 |
Deadline for Scheme becoming effective as a condition of the Halifax £250m being made available |
Group Final Salary Schemes
For Group Final Salary (GFS) Schemes, the scheme funds will be divided between GAR and non-GAR funds using the ratio of Minimum Funding Requirement (MFR) liabilities based on members with and without GARs. The non-GAR funds calculated using this method will receive the 2.5% uplift being paid to non-GAR members with individual policies.
The percentage uplift applied to GAR funds will be the age-related uplifts weighted by the MFR liabilities relating to each member with GAR rights.
Rajeev Shah, December 2001.