Equitable Life annuitants are finally set to get compensation for their losses after a decade.
The comprehensive spen-ding review confirmed payouts to Equitable victims will total £1.5bn as Chancellor George Osborne accused the previous Government of “dithering” as investors waged a 10-year campaign for justice.
The Government said it recognised that with-profits annuitants were “particularly vulnerable” to Equitable Life’s losses because they were unable to move funds elsewhere or mitigate the impact of their losses through employment. They are also generally the oldest policyholders.
A total of £620m of compensation will go to the 37,000 with-profits annuitants, who on average suffered £16,500 of losses. The Treasury says more than half of these losses have been suffered by those aged 75 and over.
But while Osborne told the Commons he “fully accepted” Parliamentary Ombudsman Ann Abraham’s findings of maladministration, the final figure is still only around a third of the £4.3bn relative losses suffered.
Treasury financial secretary Mark Hoban says: “The Government has always been committed to making fair and transparent payments to Equitable Life policyholders, thr-ough an independently designed payment scheme, for their relative loss as a result of regulatory failings.
“The previous Government spent 10 years trying to find a solution to the Equitable Life scandal. We resolved the situation in just five months.”
Hargreaves Lansdown head of pensions research Tom McPhail says savers who were not with-profits annuitants would receive, on average, just £600 each.
He says: “The key thing for with-profits annuitants is they are trapped. They just had to sit back and take the pain. But I think that a lot of the other policyholders will feel short-changed.”
Compensation payments will begin next year, with £1bn of the money set to be paid out over the next five years.