Pensions - Articles - Equitable Life announcement is a prompt for DC trustees

 John Foster, principal consultant at Aon, said: “The announcement is very good news for Equitable policyholders who have waited a long time for this. Trustees of schemes holding Equitable Life with-profits arrangements – largely through historic AVCs - should take action to understand the impact of this on their members, the options members have under the scheme rules, and to communicate with members to let them know the implications.

 “This should also be an opportunity for trustees to take a step back and revisit their overall strategy for legacy DC and AVC providers, including whether to consolidate them with more up-to-date facilities, or whether to move them out of the scheme altogether.”

 John Foster continued: “Recent changes to regulations on bulk DC to DC transfers give an additional degree of flexibility that trustees can now take advantage of when considering their options on legacy DC and AVC arrangements - such as those held with the likes of Equitable or in other traditional insurance products.

 “If trustees have previously put off reviewing these arrangements – maybe because of the ‘Equitable factor’ – it may well be the time to revisit their approach to see if they can now take action to get better value and better outcomes for their members.”

 The capital released by the Equitable Life/Reliance Life deal, is subject to a policyholder vote and targeted to be completed by the end of 2019. It will release significant capital reserves that have been held to meet future benefits, including guarantees inherent in with-profits policies. This will result in uplifts to members’ with-profit fund values of between 60% and 70%.