More than 915,000 policyholders with Equitable Life have been compensated with a total of £1.08bn, but 125,000 policyholders have not received any payment.
The Equitable Life Payment Scheme will close to new claims at the end of 2015, and Harriett Baldwin, economic secretary to the Treasury, said it has paid 88 per cent of eligible policyholders and 92.9 per cent of the money due.
Ms Baldwin said: “A final attempt to trace policyholders has been made through the DWP by sending letters to all untraced policyholders due £50 or more for whom the scheme holds a national insurance number and other data, such as their name.
“These letters have now been sent. Despite this, there remains approximately 125,000 policyholders the scheme has been unable to pay.”
The closure of the payment scheme will not affect the yearly payments made to with profits annuitants, which will continue for the duration of those annuities. Ms Baldwin said the scheme has written to all with profits annuitants to make them aware of this.
The £1.5bn compensation scheme was set up in 2010, but has been criticised for not being generous enough.
However, in a briefing paper, House of Commons researcher Timothy Edmonds said: “The practicalities of implementing a compensation scheme for such a large number of people, and over such an extended period of time, was never going to be easy or straightforward.
“That the scheme was running against the background of an ageing cohort of claimants added a pressing time factor to the mix.
“The fact is that the scheme has broadly done what it set out to do, ie compensate people broadly in line with their entitlements within a reasonable period. And it had made so many payments, it is an achievement that some members of Equitable Members Action Group might, at times, have wondered whether they would ever see in their lifetime.”
It is understood that most of the money set aside for the compensation scheme will be spent, because of the Chancellor’s announcement earlier this year that payments to non with profit annuitant policyholders who receive pension credit will be doubled.
Timeline |
January 1999: Equitable Life launches proceedings seeking approval to abandon guaranteed payouts to policyholders that it could no longer afford July 1999: Policyholders launch an appeal against the plans September 1999: Equitable wins initial legal case, with the court ruling that it acted lawfully January-July 2000: Court of Appeal reverses the decision, which is later upheld by House of Lords December 2000: Equitable closes to new business after failing to find a buyer March 2004: Lord Penrose’s report is published and claims that the society’s former management team was guilty of nurturing a “culture of concealment and manipulation” July 2008: Parliamentary Ombudsman says regulators failed to protect policyholders and calls for a compensation fund to be established July-October 2010: Government announces that payouts will begin in mid-2011. Chancellor says compensation of £1.5bn will be paid April 2013: National Audit Office said the government’s objective to compensate all Equitable policyholders by March 2014 was “at risk” because of incomplete and out-of-date policyholder information |
Adviser view
Tony Larkins, managing director of Cambridgeshire-based Beacon Wealth Management, said: “This Equitable Life issue has been going on for many years, and there will always be people who have moved away with no forwarding address. But they need to keep the leftover money in abeyance for people who reach retirement and realise they have a policy.”
