A protest this week, outside the houses of parliament, has highlighted the problems of some ex-Equitable Life policy holders barred from a £1.5 billion government compensation scheme.
Equitable Life was one of the UK most high profile insurers until its collapse in 2001, which left thousands of investors and pensioners nursing considerable financial losses, officially estimated, to be £4.3 billion.
Equitable Life With Profits Annuity holders excluded
After protracted negotiations a £1.5 billion rescue package was put in place. However, nearly 10,000 ex-Equitable Life policy holders, who bought their With Profits Annuity before 1992, are excluded and have not received a penny in compensation.
In contrast, over 35,000 people who bought their With Profits Annuity after 1992 will share compensation of £620 million.
The government believe this is fair, because they say pensioners who bought their With Profits Annuity earlier, before 1992, benefited from Equitable Life’s generous bonus declarations in the 1990’s, which ultimately caused the insurer’s downfall.
Many industry experts believe this to be far from fair, with the 10,000 or so With Profits Annuity holders seeing significant cuts in their annual incomes far in excess of any gains made.
Bond girl joins protests
The protests were organised by the Equitable Members Action Group (Emag) who include former Bond girl, Honor Blackman, amongst their number.
Explaining the problem to the Times newspaper Emag spokesman, Paul Weir, said: “The Government claims that if you started your Annuity a month before September 1992, magically you lost nothing, whereas if you started a month later you lost thousands, it’s absurd and cruel.”
Meanwhile, high profile campaigner, Honor Blackman, said: “These people have been cruelly excluded just because they had the misfortune to start their pension before the Treasury’s mean spirited cut-off date”.
She continued: “It would only cost £60 million in this Parliament to put this right while this group are still alive. I call on the Government to do the right thing now.”
Responding to the protests a Treasury spokesman said: “The government set up the Equitable Life payments scheme to provide payments to around 950,000 policyholders by April 2014. The scheme continues to make good progress, with tens of thousands more policyholders having received payment since the scheme last reported progress in July.”
“The scheme will issue a further progress report in the New Year, but with approaching £500m distributed the scheme remains on track for completion by April 2014.”