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Categories:Pensions,Politics

Coalition commits to "fair" payouts for Equitable Life victims

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The coalition Government has confirmed it will end the rules requiring compulsory annuitisation at 75 and implement the Parliamentary Ombudsman’s recommendation to make “fair and transparent” payments to Equitable Life victims.

The Conservative-LibDem deal, published today, does not mention whether tax relief on pension contributions to higher rate taxpayers wil be reduced to 20 per cent.

But the parties commit to establishing an independent commission to review the long term affordability of public sector pensions, while protecting accrued rights.

The coalition has brought forward the date to restore the earnings link for the basic state pension to April 2011 and has given a “triple guarantee” that pensions will be raised by the higher of earnings, prices or 2.5 per cent, as proposed by the Liberal Democrats.

The parties outline plans to phase out the default retirement age and hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.

The agreement sets out that the Government will, through an independent payment scheme, make “fair and transparent payments” to Equitable Life policy holders for their relative loss “as a consequence of regulatory failure”.

The parties have agreed to hold off on cuts to inheritance tax and to seek a “detailed agreement” on taxing non-business capital gains at rates similar
or close to those applied to income, with generous exemptions for entrepreneurial business activities.

Tackling tax avoidance is “essential” for both parties and detailed development of Liberal Democrat proposals will take place.

The coalition Government insists deficit reduction and continuing to ensure economic recovery is the “most urgent issue” facing Britain. Details should be set out in an emergency budget within 50 days.

Equitable Members’ Action Group spokesman Paul Weir says: “We welcome the new Government’s commitment to implement the Parliamentary Ombudsman’s report in full. After 10 years of denial and obstruction by the previous administration it has been a long time coming.

“Sadly, many thousands of Equitable pensioners have died without justice, sacrificed on the altar of Gordon Brown’s defence of  ’lite touch’ regulation.”

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Readers' comments (7)

  • Good news for Equit members as this is way overdue thanks to Crash gordon and lying cronies.

    However, all public sector workers whether in employment, in retirement of derferment should have their pensions cut just like we have had ours cut in the private sector by stealth. If we are supposed to be one society and in this financial mess together, then big cuts should be big time and cap benefits to 30k a year earners.

    And stop pensions for all those dodgy policemen and fireman who got early retirement and are now moonlighting doing gardening, running new businesses, painting and decorationg and playing in bands etc etc. GREECE HERE WE COME!

    Any new public sector worker = no pension offer just buy in the private sector like the rest of us.

    Reasons are: Simple econmics. Private sector creates profits, pays tax on these profits which pays for public sector salaries and pensions. There are no profits from public sector workers so without private input there is no money for them. Put the horse and cart the right way around moron............. MPs!!!

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  • A lot of good things proposed. But what happened to caveat emptor - most EL investors did so because they thought they were being clever cutting out the middle man i.e. independent financial advisers. I think a lot will be disappointed as the proposed payouts will be linked to the average return on With Profits funds at the time - which were pretty mediocre.

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  • These people are not 'victims' who deserve taxpayer money, they were victims of their own arrogance and stupidity for believing the hype, lawyers, judges, politicians, public pension scheme trustees... on and on.

    I can remember being told by the regulator to keep clear of these 'victims' while those in the know sneaked out the back door! Parliamentary AVCs included..

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  • As someone involved in their campaign they certainly were victims. The Parliamentary Ombudsman declared that had the DTI and the FSA got their act together no one could have invested from 1991 onwards as the firm would have been suspended. Retrospective analysis shows that EL were at best over trading since the mid 80's.Their continued prudential approval of EL right up to 2001 exposed 1.5m investors to an unecessary risk. If EL was completely unregulated then Caveat Emptor applies but if their is regulation investors have the right to believe that it is protecting them

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  • in reply to exasperated 12/05/2010,I was a member of a company pension and took my financial advisors advice and opted to become a policy holder,I do not seek taxpayers money only what was denied me when I retired if that is arrogant or stupid,I apologise

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  • Equitable Life chose to allocate resources fairly across its members and deliberately sought approval from the law to do this. Its methods were perfectly transparent and fully overseen and regulated. it proposed different terminal bonusus depending whether you had a GAR or not.
    The courts turned round and said this was not legal which ruined Equitable Life.
    Either you allow a company to run its own business or you regulate it. If you regulate it then you need to ensure that it complies with the rules. If you are regulating the company and telling investors that it is fully complient then you are responsible to those investors for regulatory failures. This is a government failure and so said the unbiased ombudsman.
    Compensation is due, but I wouldn't expect it to be a great deal for most people.

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  • The FSA failed in their duties to regulate this company. The Govenment have two options pay up compensation or many of us will be forced into the Welfare Benefits system.In three years i will have nothing, because Equitable Life transferred my annuity to Prudential, who have confirmed they were given insufficient funds to pay us, this results in a yearly decrease.

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