Equitable Life payment scheme on track for June start

The Treasury confirmed today (16 May) that the Equitable Life Payment Scheme is "on track" to make the first payments before the end of June, with priority given to elderly policyholders or the estates of deceased policyholders.

Policyholders do not have to do anything and will be contacted if they are eligible, the Treasury added.

The scheme reflects previous announcements that with-profits annuity policyholders will have their losses covered in full and that scheme payments will be free of tax and will not affect eligibility for tax credits.

Under the scheme policyholders must have made a "relative loss", defined as "the difference between the actual returns received, or expected to be received, from Equitable Life and the assumed returns that the policyholder would have received if they had invested the same amount in a similar product in a comparable company."

An amount of £1.5bn is available for the scheme, £1bn of which is to be paid out upfront over the first three years of the spending review period.

In line with the Financial Secretary’s ambition to start making payments by the middle of this year, the scheme is on track to make the first payments before the end of June.

Payments will not be made to those with a loss of under £10.

Mark Hoban, financial secretary to the Treasury, said: "Today, I am setting out the design of the Equitable Life Payment Scheme for parliament, policyholders and all other interested parties to see.

"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."