PensionsNov 5 2015

125,000 Eq Life policyholders to miss out on compensation

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125,000 Eq Life policyholders to miss out on compensation

With less than two months to go until the Equitable Life compensation scheme closes to new claims, only 88 per cent of eligible policyholders have been paid.

HM Treasury has reported the Equitable Life compensation scheme has paid 92.9 per cent of the money due. A total of 416,726 payments have been made to individual non-annuitant investors totalling £567m.

Exactly 38,043 with-profits annuitants or their estates have been issued payments by the scheme. These initial and subsequent payments total £333.8m.

The government also stated that 460,684 payments totalling £176.2m have been issued to those who bought their policy through a company pension scheme.

The scheme has made major efforts have to trace policyholders, including extensive electronic tracing methods, writing to policyholders’ last known addresses, a national advertising campaign, working with other government departments and liaising with group scheme trustees.

As announced at the Summer Budget, a final attempt to trace policyholders has been made through the Department for Work and Pensions 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 remain about 125,000 policyholders whom the scheme has been unable to pay and the compensation pot will be closed to new claims on 31 December.

This means any policyholders who still believe themselves to be eligible are encouraged to call the scheme on 0300 0200 150 before then. The scheme can verify the identity of most policyholders on the telephone, which means any payment due can usually be received within two weeks.

This will not affect the yearly payments made by the scheme to with profits annuitants, which will continue for the duration of those annuities. The scheme has written to all with profits annuitants to make them aware of this.

In the Summer Budget, the chancellor also announced that payments to non-with profit annuitant policyholders who receive pension credit will be doubled.

Any policyholders who have made a claim from the scheme by the time it closes and are receiving pension credit on that date, will receive this second payment without having to take any action.

Difficulties at the world’s oldest mutual started in January 1994, when the society announced plans to cut the size of the final bonuses paid to its 90,000 guaranteed annuity rate policyholders, after falls in interest rates and high inflation.

Equitable Life, which was established in 1762, closed its doors to new business after it failed to find a buyer in December 2000 and the Court of Appeal told the society it must honour its original commitments.