Frequently asked questions relating to the 2023 Bonus Declaration

These FAQs have been designed for former Equitable Life With-Profits Annuity Customers who'd like more information on the 2023 Bonus Declaration.

No, your plan conditions do not allow you to change your Anticipated Bonus Rate.

No, your plan conditions do not allow us to switch your annuity to a Guaranteed Pension Annuity.

No you are unable to transfer to another company or cash in your annuity.

Regular Bonus

Once a Regular Bonus is added to your Plan, it can't be removed, and it increases your Guaranteed Annuity. To maintain investment flexibility and to protect the financial strength of our With-Profits Fund, we aim to keep the level of guaranteed benefits at a sustainable level. No Regular Bonus was being paid at the time this business transferred from the Equitable Life Assurance Society to The Prudential Assurance Company Limited.

To increase the Regular Bonus, the cost of the guarantees on all former Equitable Life With-Profits Annuities needs to reduce and we also need to be confident that the higher Regular Bonus could be supported by the investment returns we expect to achieve from our With-Profits Fund in the future without impacting the flexibility of our investment policy.

Overall Rate of Return (ORR)

The ORR is applied on your Plan anniversary falling on or after 1 April 2023, It's designed to give credit for the investment return earned by the With-Profits Fund during 2022, allowing for smoothing and charges. The same ORR applies to all Plans and can be negative.

Interim Rate of Return (IRR)

The IRR is applied on your Plan anniversary and is intended to give credit for the expected future investment return on the With-Profits Fund from 1 January 2023 until your Plan anniversary falling before 31 March 2024, allowing for smoothing and charges.

The IRR can change or be removed at any time.

The change in your Total Annuity at your next Plan anniversary will reflect the level of ORR and IRR declared, after removing the IRR declared in the previous year. We also take the Anticipated Bonus Rate, and any Guaranteed Interest Rate for your Plan, into account when working out your new income.

We promise to pay you the higher of your Guaranteed Annuity and your Total Annuity.

The former Equitable Life With-Profits Annuity is designed to provide a regular income for life, no matter how long that may be, which is linked to the performance of our With-Profits Fund. It provides guarantees in the form of a Regular Bonus and a promise to pay you the higher of your Guaranteed Annuity and your Total Annuity. 

Once a Regular Bonus is added to your Plan, it can’t be removed. In order to maintain investment flexibility and to protect the financial strength of our With-Profits Fund, we aim to keep the level of guaranteed benefits on all our With-Profits products at a sustainable level. The Regular Bonus will remain unchanged at 0%, which means the level of income provided by your Guaranteed Annuity will go down by the level of your Anticipated Bonus Rate (ABR).

The level of income provided by your Total Annuity will, however, go up if the combined effect of the Overall Rate of Return (ORR) and Interim Rate of Return (IRR), after offsetting the IRR declared at last year’s bonus declaration, exceeds the combined effect of the ABR and any Guaranteed Interest Rate (GIR).

The promise to pay the Guaranteed Annuity, where this exceeds the Total Annuity, ensures the income payable from a former Equitable Life With-Profits Annuity never falls below the Guaranteed Annuity, regardless of the investment performance of our With-Profits Fund.

The Interim Rate of Return applicable on your plan anniversary is intended to give credit for the expected investment return earned by the With-Profits Fund from 1 January 2023 until your plan anniversary falling before 31 March 2024 allowing for smoothing and charges. The IRR can change or be removed at any time and it is the value of the IRR on your plan anniversary that will determine your income.

The Interim Rate of Return is an annual rate of return. As we apply the Interim Rate of Return to give credit for the expected investment return earned by the With-Profits Fund from 1 January 2023 until your plan anniversary falling before 31 March 2024, then we should only credit your Total Annuity with a proportion of this annual rate. The proportion is based on the number of days between the 1 January 2023 and your plan anniversary. For example if your next plan anniversary is 1 July 2023 then there are normally 181 days from 1 January 2023 to your plan anniversary - you would therefore receive 181/365ths (roughly half) of the Interim Rate of Return.

The income you receive is the greater of your Guaranteed Annuity and Total Annuity.

Guaranteed Annuity - is increased at your plan anniversary by any Regular Bonus declared and decreased by your Anticipated Bonus Rate.

Total Annuity - is increased or decreased at your plan anniversary by the Overall Rate of Return, decreased by your Anticipated Bonus Rate and decreased by any Guaranteed Interest Rate. It can be further increased or decreased by any differences in the Interim Rate of Return applicable at this plan anniversary and at your last plan anniversary.

No - the method of calculating your new income has not changed. This remains exactly the same as before. A breakdown of this calculation is shown on your yearly statement.

The Prudential Assurance Company Limited (PACL) With-Profits Fund has much greater investment freedom and a more active management policy than the Equitable Life Assurance Society (ELAS) could provide and therefore the potential for better investment returns.

When this business transferred from ELAS to PACL in 2007, ELAS’s Fund was primarily invested in bonds because it was heavily focussed on ensuring that guaranteed benefits could be met.  This limited the potential for investment growth. Our Fund is financially strong, which allows us a greater amount of investment freedom and means we can adopt a more active approach to managing our assets, which should be more beneficial to all With-Profits customers.

There was no guarantee that transferring the business from ELAS to PACL would result in increases in your income. The potential benefits and risks of the transfer from ELAS to Prudential were set out in the policyholder circular issued in September 2007. This included the risk that your annuity could have had better returns if you were to stay invested with ELAS.

The bonuses we declare, together with your Anticipated Bonus Rate and any Guaranteed Interest Rate, determine the amount of income you’ll receive each year. The impact of both the Anticipated Bonus Rate and any Guaranteed Interest Rate was to increase the income payable from the annuity in the early years. However, this also meant a higher chance of a fall in your future income payments.

2023 Bonus Rates for Former Equitable Life Customers

In 2022, our With-Profits Fund was able to perform very effectively.

The Government Compensation Scheme

On the 20th October 2010 the Government announced its intentions and commitment to a transparent and fair payment scheme of compensation.

Historic information about the transfer

In this area you will find information on the transfer in 2007 and special bonus payment in 2008.

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