How much have we lost?
The fog of misinformation makes it very difficult to put a price on the total scale of our losses – but it runs into the billions. EMAG estimates it as around £6 billion. Even the government’s carefully crafted estimate (which omits exit penalties and reinvestment costs) comes to £4.1 billion.
Look at it another way – you probably had 16% taken from your funds in 2001. If you stayed around you will have suffered further cuts and if you managed to get out you will have been hit by a swingeing Market Value Adjuster of up to 10% on top. WP annuitants have seen their annual pensions cut by 60% or more. And don’t think that being moved to the Prudential is the end of their pain. They have been put into a separate fund with few assets, unable to benefit from the growth in other Prudential funds. And except for a token one-off payment of £5,000, the Government has completely excluded the oldest and frailest of this group – those who bought their annuity before September 1992.
As a result of Equitable I cannot afford to retire, I am 67 years and I also have prostate cancer. I cannot afford to stop work given that with a state pension of £5,000 per year I would have to go cap in hand to the state for credits. Any faith I had in private pension providers evaporated with Equitable Life.
I am now 80 and my wife 84 years of age. Our gross annuity has reduced from £18,700 in 2000 to £9,500 in 2008 - a reduction of 49%. We have resorted to an Equity Release Scheme on my house at a 90% rate to replace some of the lost income. This means that we will not be able to leave anything reasonably substantial to our family, and will severely restrict funds available for illness in old age. We have had to cancel the Lifetime Care Insurance which was intended to contribute towards possible nursing home cover in the future.
As a result of Equitable my income has reduced by approx 33%. This means of course that 'luxuries' such as holidays, new clothes and repairs to my house and car have to be paid for out of savings. This has not been a problem so far, but savings are irreplaceable and the time will shortly come when lack of income will present a problem.