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EMAG warns Equitable Life payouts may be slashed

The Equitable Members Action Group has questioned the Government’s promises of fair compensation for Equitable Life victims, following reports that the Treasury may cut compensation to just £1bn.

EMAG estimates the losses to be £4.67bn, a figure that was published by the Parliamentary Ombudsman in her 2008 report.

EMAG says it fears the Treasury will use the work of Sir John Chadwick and actuaries Towers Watson to justify a huge reduction in the amount of compensation.

In March EMAG withdrew from working with Chadwick’s review of compensation for policyholders, labelling his work a “Treasury stitch up”.

EMAG general secretary Paul Braithwaite says: “We are deeply disturbed by the gulf between the expectations raised by the Government’s promise and what appears to be actually going on at the Treasury. If the government offers victims 20p in the pound – there will be outrage.

“Given the Treasury’s continuing refusal to make public the calculations of Towers Watson, and the many unrealistic assumptions they have been briefed to make, EMAG’s suspicion is that what they are doing is nothing better than a work of fiction designed to come up with the number the Treasury intended in the first place.”

In a letter sent to MPs, EMAG argues that if cuts have to be made to government spending now, it should be a percentage across the board and Equitable Life victims should not be first in line to shoulder the whole burden.

The letter says: “If health, education, civil service pensions, local government salaries etc are to be subject to cuts then one might expect us to shoulder part of the burden by accepting the same percentage cut as other spending commitments, but robbing 80 per cent from the compensation due to one million elderly and increasingly infirm Equitable Life victims would be an outrage.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 15th June 2010 at 1:48 pm

    The compensation fund could be boosted by nearly £40m simply by lopping it from what the FSA blows on bonuses and outside consultancy exercises every year, not to mention hospitality, objets d’art, golden parachutes, excessive expense claims and what must be some of the most expensive office premises in the whole of the UK.

    Given that most of the Equitable Life debacle could have have been avoided if the regulator had been doing its job remotely properly, this hardly seems to be an unreasonable proposition. Okay, the industry ultimately foots the bill (as always), but I’d rather see the money go to compensate the Equitable Life victims than merely being frittered away by some unaccountable and profligate quango such as the FSA.

    What do you think Hector? Nothing to say on the subject? Ah, I thought so.

  2. £1bn of taxpayers money to ‘compensate’ these stupid and greedy people?

    Disgraceful!

    They used Equitable because they believed the marketing B……t. Why does this deserve compenstion?

  3. Gerry Cooper – some of us were only members of Equitable Life because our work pensions were routed through them – and it was not our ‘choice’ to make! Like others we have had to make considerable life changing decisions in order to make up for pensions lost and if you knew the paltry monthly income we now have, you would not make such a ridiculous statement. Many people have gone to their graves in similar situations after having worked hard and paying their dues all of their lives. Were the members of Northern Rock and those investing in Iceland being ‘greedy’ and believing in ‘marketing rubbish’?

    Please don’t comment unless you know all the facts.

  4. This was a pension set up by my company. I do not have the luxury of working for the public sector and getting a protected pension. I now wish I had not lived this long.

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