20 November '02 - Letter to the Times from Paul Braithwaite

Equitable Life and its contribution to the pensions crisis
From the General Secretary of the Equitable Members' Action Group

Sir, Charles Thomson, the chief executive of Equitable Life, " . . . blamed a steep fall in the stock market during the first six months of the year for the sharp deterioration in Equitable's finances" (report, November 16) and, by implication, for the savage cut in at least 50,000 annuitants' pensions by up to 30 per cent.

Your accompanying chart attributes no fewer than five cuts in the last 18 months to Equitable's explanation of "falling stock markets". Rubbish.

The FTSE fell by a modest 10.7 per cent during the first six months of this year, yet there was not one but two devaluations of policyholder funds totalling 10 per cent during this period. Equitable had just 25 per cent in equities.

In between those painful cuts the Equitable board found time to increase Charles Thomson's package by £230,000 to £640,000, and gave the part-time chairman, Vanni Treves, a £210,000 bonus.

Following the House of Lords judgment Equitable has for two years been consistently less exposed to the stock market than any other pension company. It now has just 5 per cent in shares.

There is no evidence that Mr Thomson is on top of the situation. A year ago he begged policyholders to vote for a compromise - which they did, led by a promise of stability, the return to being a normal fund, and the prospective investment of £4 billion in equities (report, January 7, 2002).

The reality is that under the disastrous stewardship of Messrs Treves and Thomson the value of the once justifiably proud Equitable Life with-profits fund will have roughly halved by Christmas.

Charles Thomson and Vanni Treves should have the decency to return their bonuses. Annuitants and policyholders should write to their MP if they believe the regulators have failed them.

Yours faithfully,
PAUL BRAITHWAITE,
General Secretary, EMAG Nov 17th 2002