Many Equitable Life policyholders will receive compensation for their losses over the next five years.
But the government will take a further year to inform annuitants if they are eligible for compensation.
Compensation payments to the victims of the Equitable Life collapse will start by the end of June.
Just under a million policyholders will be offered £775 million. A further 37,000 with-profits annuitants will share a £620 million pot – all of the payments will be spread out over a five year period.
About 100, 000 people will not receive a payment because they only suffered a loss of £10. Another 435,000 people who have been judged not to have suffered any losses will not be sent any cash.
Policyholders will be informed whether they will receive compensation over the next 12 months by letter.
Spokesman for the the Equitable Members’ Action Group Paul Braithwaite said: “It has taken the Government ten months to come out with a penny-pinching scheme to be eked out over the next five years. Why can’t the victims, who’ve already waited a decade, be paid out their due this year?”
However, a spokesman for Equitable Life said: “There has been no delay. We said we would begin paying compensation in June and that is what we are doing. Through spreading the payments we can afford to give people more money. The compensation will cover people who took out policies between 1 September 1992 and 31 December 2000”.
The life insurance company collapsed in 2000 and since then the affected policyholders have been waiting to receive their compensation.
Mark Hoban, the financial secretary to the Treasury, said: “This is a complex issue, but the scheme has been designed to reflect the principles of fairness, transparency and simplicity. When payments start in the middle of this year, it will be a huge milestone for the policyholders who have waited so many years for the resolution of this matter”.
The repayment scheme will be run by National Savings and Investment.