EQUITABLE Life campaigners have condemned as a "fire sale" plans to sell the rump of the troubled fund, bringing more uncertainty and worry for 500,000 investors this Christmas.
Paul Braithwaite, chairman of the Equitable Members Action Group, said: "Plans to hive off Equitable's remaining policyholders are entirely predictable. This is a fire sale, designed to nail the coffin of this troubled company before the Parliament
ary Ombudsman delivers her report next summer.
"But investors should be careful what they wish for. If it goes into one of the zombie funds, they will treat these policies as milch cows and consumers may be no better off."
Equitable members are used to bad news. What was considered the UK's finest insurance company closed in 2000, after a House of Lords ruling forced it to pay pension guarantees it could not afford.
Members saw the value of their policies cut twice: first in 2001 by 16% and then again in 2002 by 10%.
In addition, that year chief executive Charles Thomson switched the stricken fund out of equities and into lower-risk fixed interest gilts, which meant members missed out on the gains enjoyed elsewhere as share prices soared.
The firm has shrunk from £26bn to £7bn as investors have fled. Canada Life bought the annuities book in February and the Prudential is due to take over the with-profits annuities policies on December 31.
Chairman Vanni Treves plans to put the remainder of the business up for sale in the new year in an attempt to improve investment prospects for investors. He indicated he had already received tentative approaches.
Treves said: "Whether we will run the society off or pass it to someone who can offer our policyholders something better, 2008 will decide the future of Equitable Life."
Elsewhere, opinion is divided over whether a sale will be good for policyholders. Financial adviser Alan Steel, of Alan Steel Asset Management, said: "If it is taken over by a company with a good reputation and track record, then this will be welcome news.
"The worst that can happen to these poor souls is that there is no change in performance, and the takeover makes no difference."
Laith Khalaf, Hargreaves Lansdown's pensions analyst, argues that everything will depend on the financial strength of the acquirer and its scope to increase over time the Equitable fund's exposure to equities, which hold out the prospect of superior long-term returns compared with gilts.
He said: "The Pru acquisition of the with-profit annuity book, for example, looks like a good deal for policyholders because it will allow them to share in the Pru's superior asset allocation.
"But if it goes into one of the consolidation or zombie companies, or any other company without a strong equity-asset mix, then it is unlikely that things will improve."
A report into the failure of Equitable by Parliamentary Ombudsman Ann Abrahams is due before June after a number of delays.
