The Government is extending the Equitable Life Payments Scheme to the middle of 2015 as it steps up attempts to trace policyholders.
The payouts scheme was due to end in April 2014 but the Government says it wants to maximise payments to those who lost money.
In June 2011, the Treasury began distributing compensation to Equitable Life policyholders who annuitised after 1992.
It is being operated by National Savings & Investments and £734m paid out a total £1.5bn provision for payment to policyholders.
In April this year, the National Audit Office warned the Government it should extend the deadline because it was too short and the Government had failed to prepare sufficiently beforehand.
In July the Public Accounts Committee chair Margaret Hodge slammed the “unacceptable” Treasury handling of the scheme and claimed up to 20 per cent of policyholders could miss out.
The Treasury says the address information the payment scheme received from Equitable Life is up to 20 years old or non-existent in some cases so it is unable to trace some policyholders. More than 400,000 policies were supplied without contact addresses.
In May the Treasury admitted it destroyed a disc containing the names and addresses of 350,000 Equitable Life victims over data protection concerns.
To boost awareness the Treasury will shortly run a national advertising scheme to encourage any eligible policyholders to come forward and claim.
Treasury financial secretary Sajid Javid says: “This Government has allocated up to £1.5bn to help the policyholders of Equitable Life who suffered an injustice, with hundreds of thousands of policy holders receiving over £700m in payments since 2011.
“We have made strong progress, but we want to maximise the number of people who will eventually receive payments, which is why we are extending the Equitable Life Payment Scheme to mid-2015.”