The scheme announced in the Budget, is designed to compensation pensioners who bought With Profit Annuities from the beleaguered insurer before 1992. The original compensation scheme only paid out to victims who had bought their With Profits Annuity after 1992, leaving thousands of pensioners out of pocket.
Whilst under no obligation to do so, the Government decided to make a one off ex-gratia payment to early victims of the collapsed insurer. In his Budget earlier this year, George Osborne said one off payments of £5,000 would be made in the 2014/15 tax year, or earlier if possible. It has now been announced the payments will be brought forward and made in the current tax year, providing necessary legislation can be pushed through Parliament in time.
Equitable Life compensation
Around 10,000 people will be in line for a payment of £5,000, whilst pensioners who qualify for pension credit will receive an extra £5,000.
Sajid Javid, the Economic Secretary to the Treasury, said: “This government is helping to compensate the policyholders of Equitable Life who suffered an injustice.”
He continued: “As the Chancellor said in this year’s Budget, we will make ex gratia payments of £5,000 to those elderly policyholders who have With-Profits Annuities dating from before September 1992 in the next financial year or earlier if possible. I’m delighted to say today that we now intend to make these payments in the current financial year.” (Source: Telegraph)
The Equitable Life saga, which started after the insurer collapsed when it was unable to meet guarantees on Annuities it had sold, has now dragged on for over 20-years. The Equitable Life Members Action Group, as well as policy holder, has welcomed the news that victims will now receive some compensation. Although the news will be tinged by sadness that the amount received, will in most cases, be far lower than the amount lost.