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.”