Equitable Life Assurance Society (ELAS) With-Profits Annuitants (WPA)

Compensation from the Government’s ‘Equitable Life Payment Scheme’ (ELPS) for the With-Profits Annuitants (not non-WPA Policyholders)

 

The Government compensation figures for eleven actual WPA policies have been independently checked by the ‘Forfar WPA Model’. After some further clarifications  had been sought and obtained from the Government’s actuarial advisers, the ‘Forfar WPA Model’ and the ‘ELPS WPA Model’ (on which the ‘official’ Government compensation figures for the WPAs was based) gave close agreement - see Table below, columns (2) and (3). 

 

Although these 11 WPA policies do not, in every case, provide absolute agreement with the ‘official’ compensation, any differences that remain are, in my view, insignificant.

 

Thus, in my view, although only a selection of actual WPA policies have been checked, the former Equitable Life With-Profits Annuitants (WPA annuitants) can take comfort from this exercise that their compensation calculations have been done correctly.  

 

Differences in Relative Loss (RL)  between the ‘Forfar WPA Model’ and the ‘ELPS WPA Model’

 

Forfar WPA Model

Case

Number

 

 

 

Difference in  the Relative Loss

  as % of the total comparator

annuity payments

 

 

 

 

Absolute difference in the Relative Loss (i.e. in £ - not percentages)

 

(1)

(2)

(3)

 

 

 

1

0.0%

0

2

0.0%

4

3

0.0%

7

4

0.0%

5

5

(0.1%)

21

6

0.0%

35

7

0.5%

140

8

0.0%

28

9

0.0%

1

10

0.0%

41

11

0.0%

1

 

The ‘Forfar WPA Model’ is based on the Equitable Life Compensation Scheme design document, the published actuarial basis and subsequent clarifications thereon – see below for website addresses – and is designed to check that the Government compensation payments have made according to the published actuarial basis plus clarifications.

‘ELPS WPA Model’=Equitable Life Payments Scheme model on which policyholders’ compensation figures were based.

With-Profits Annuitant = WPA.

Relative Loss (RL) = the accumulated difference between what a competitor life company (Comparator) would have paid (or, it is expected, will pay in future) and what Equitable Life would have paid (or, it is expected, would pay) if policies had not been transferred to another life office.

 

The Equitable Life Payment Scheme (ELPS) Design Document is at:-

 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/317764/elps_main_doc_final.pdf

 

The Technical Annex (Annex A) is at:-

 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/317766/elps_annex_final.pdf

 

The Clarifications are at:-

 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/356352/SDPR_Update_September_2014___published_as_Clarifications_.pdf)