Troubled life office, Equitable Life, has increased penalties on maturing policies to 10% from 4%. The early withdrawal penalty has also been increased from 14% to 20%. The equity (stock and shares) holding position of the 'with profit' fund is reduced from 38% to 15%.
Our view
This moves reaffirms the position that Equitable are being extremely defensive in protecting the 'with profits' fund for existing policyholders. The reduced equity exposure indicates a weaker fund that is trying to protect itself and perhaps cannot afford the risk of being invested in a higher risk, more volatile, market. Both the penalty increases, the lack of bonuses and the reduced equity position possibly reflect the number of people who actually have or are considering moving their money to alternative homes.
For a copy of our factsheet on Equitable Life - contact us.