Due to the near collapse of Equitable Life in 2000 many that bought policies between the 1950’s and 1988 were left without sufficient funds to supply their pensions. The company failed to set aside enough funds to cover the payouts. Losses have been estimated at 5 billion pounds.
For over a decade now there has been discussion on how much the government will pay to compensate those hurt by Equitable Life’s actions. There are about 1.5 million people affected. In October the coalition government will make its proposal for payout known.
In 2008, a Parliamentary Ombudsman declared that Equitable’s investors should receive full compensation for losses incurred due to official failure in regulating Equitable’s practices in the 1990’s. The previous government did not agree with such a decision and many have feared the payout could result in only 10 per cent being paid. This is due to Labour government’s request for former High Court judge, Sir John Chadwick, to devise a limited payback plan. He recommended only 400 to 500 million pounds of the 5 billion pounds to be compensated.
The Equitable Members Action Group is sending letters to ministers and the Treasury to plead their case before the judgment in October. Treasury Minister Mark Hoban has said that the government agrees with the Ombudsman’s decision that a higher compensation should occur as opposed to Sir Chadwick’s proposal of close to 10 per cent.
Hoban added: “The scheme will be a significant spending commitment for this government and cannot be considered in isolation from the other spending decisions that it will need to make over the coming months, and what is affordable in that context.”