First Equitable Life compensation

29 June 2011 Last updated at 22:28 GMT Payments are now starting, for the first few hundred eligible policyholders, the Treasury says The first compensation cheques are being sent on Thursday 30 June to people who lost money invested with the Equitable Life pension company.

The compensation scheme was designed at the request of the coalition government and will eventually pay about ?1.4bn to 982,000 policyholders.

They lost money after the Equitable nearly collapsed in the year 2000.

Hundreds of eligible policyholders will receive the first wave of cheques during the next few weeks.

The bulk of the compensation payments will be paid in the next three years, with the oldest policyholders being paid first, alongside inheritors of dead policyholders.

The Financial Secretary to the Treasury, Mark Hoban, said: "After a decade of delay and indecision, I am delighted that today we're beginning to send out cheques to eligible Equitable Life policyholders."

"We will pay out ?1.5 billion to ensure that policyholders receive the justice they deserve," he added.

Different payouts

The near-collapse of the Equitable, once regarded as the best managed private pension company in the UK, has been the longest running financial scandal of the past decade.

Of those policyholders who will receive payments, 37,000 with-profits annuitants will share ?620m as they have been have been judged to have lost the most.

They will receive their money in annual instalments while they remain alive.

The remaining 945,000 eligible policyholders will share ?775m in the form of lump sums.

Not all policyholders in the Equitable are eligible for compensation.

It has been decided that about 435,000 policyholders did not in fact lose any money, while another 100,000 policyholders lost less than ?10 each.

They will not be paid as it has been judged that the sums involved are too small to justify the administrative costs involved.

The Treasury said no-one had to do anything at the moment, as all policyholders due a payment would be written to during the next year.

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Equitable Life payments to start

16 May 2011 Last updated at 15:16 GMT Payments will start in June 2011, the Treasury says Compensation payments to savers in the collapsed Equitable Life pension company will start by the end of June.

The Treasury has announced the details of the repayment scheme, which will be run by National Savings and Investment (NS&I).

It will offer ?775m to about 945,000 policyholders, while ?620m will be shared among 37,000 with-profits annuitants.

The payments will be spread over five years, with ?1bn paid by 2014.

The oldest policyholders will be paid first, receiving ?500m during this financial year, while ?300m will be paid in 2012-13 and ?200m the following year.

The Financial Secretary to the Treasury, Mark Hoban, said: "This is a complex issue, but the scheme has been designed to reflect the principles of fairness, transparency and simplicity."

The timetable was criticised by the Equitable Members' Action Groups (Emag).

"The compensation letters that are to go to victims will be spread out over 12 months - so many people will not know what's happening for at least a year," said an Emag spokesman.

Letters due

About 100,000 policyholders will not receive any money as they lost less than ?10 each - too little to be repaid in the light of the administrative costs.

Meanwhile a further 435,000 policyholders have been judged not to have suffered any losses.

The Treasury said all policyholders due a payment would receive a letter before June 2012.

That will tell them how much they will get and approximately when they will receive it.

However, those not due anything will not be contacted at all.

The Treasury said there would not be any faster payments for those in hardship.

"The scheme will make all reasonable effort to avoid unnecessary delays in making payments," the Treasury said.

"However, regardless of circumstances, payments cannot be brought forward on grounds of hardship."

Although the government said the policyholders had suffered "relative losses" of ?4.1bn, it has decided it cannot afford to repay that sum.

So while the with-profits annuitants will be repaid all their losses, the other savers will be repaid just 22% of their losses.

Relative loss is defined as "the difference between the actual returns received, or expected to be received, from Equitable Life and the assumed returns that the policyholder would have received if they had invested in a similar product in a comparable company", the Treasury said.

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