21 October 2010
Further details of the plans to compensate Equitable Life policy
holder have now emerged, following yesterday's announcement on the
Equitable Life review by the Chancellor, George Osborne, in the
Spending Review.
The Treasury has published a new statement and also related
information documents here on their webpage:
http://www.hm-treasury.gov.uk/fin_equitable_life.htm
Compensation payments will start in 2011 and be staggered over a
number of years. Some 1.5 million policyholders with Equitable Life
are expected to receive a share of a total of £1.5bn in
compensation. The Independent Commission on Equitable Life Payments
will provide advice to the Government on how to allocate payments
in January 2011, so that the Government can work towards making
first payments by the middle of next year.
Equitable Life came close to collapse nearly 10 years ago. A
review by the Parliamentary Ombudsman in 2008 recommended that
compensation be paid to policyholders.
Mr Osborne has said that he accepted the views of the
Parliamentary Ombudsman when deciding on the level of compensation
to be paid. The chancellor told the commons: "I agree with the
Ombudsman that the relative loss suffered is the difference between
what policyholders actually received from their policies, and what
they would have received elsewhere". He added "The Parliamentary
Ombudsman herself recognised that a balance had to be struck
between being fair to policyholders and fair to taxpayers."
However campaigners deemed the steps as "woefully inadequate"
and argued that a figure of £5bn was more accurate. Paul
Braithwaite, of the Equitable Members Action Group, said:
"We are shocked at the deplorably low level of the proposed
payout. It effectively means that 400,000 serious pensions savers
will have 75% cuts." EMAG also pointed out that those who took out
their pension prior to September 1992 were not being considered for
compensation.
A spokesman for the Equitable Life said: "The burden of
government has been to decide on what is fair between Equitable
Life policyholders and tax payers. The immediate task is to get on
so that policyholders who have suffered losses see the colour of
the money and obtain closure after a decade of waiting."
