26th July 2013
More than 200,000 Equitable Life pension savers may never see any compensation as a result of the Government losing their contact details.
In one of the worst financial scandals in the UK, Equitable Life was on the precipice of collapse in 2000, and thousands of savers saw the value of their nest-eggs collapse.
The Treasury established a compensation scheme but due to a lack of publicity around the plan and its cut-off deadline there is concern that many who lost out will never see a penny in redress as the Government is unable to locate their contacts details.
A damning report from the Commons Public Accounts Committee concluded that one-in-five Equitable pension savers may not be contacted by the before the deadline to apply for compensation closes in March 2014.
As a result the Committee said that the Treasury predicted that up to 236,000 people might not receive any compensation.
Committee chairwoman, Margaret Hodge MP, in the report said: “It is completely unacceptable that more than 10 years after the collapse of Equitable Life so many victims still have not received the compensation they are entitled to.
“Hundreds of thousands of conscientious savers are losing out because of the Treasury’s failure to get a grip on the Payment Scheme. It focused on an arbitrary target for making the first payments at the expense of proper planning and this has led to unacceptable delays and spiraling costs.”
By March last year, only £168m had been paid out to policyholders, just a third of the £500m expected and only 35 per cent of policyholders have received payments despite 72 per cent of the budget being spent.
Hodge added: “Twenty per cent of policyholders, between 200,000 and 236,000 people, might never receive any money at all because the Treasury believes it may be unable to trace them.”
In 2010 the Treasury was given powers to make payments to just over a million former policyholders of the Equitable Life. The Treasury engaged NS&I, an Executive Agency of the Treasury, to operate the Scheme, and NS&I out-sourced it to Siemens. The Siemens contract was subsequently bought by ATOS. At the end of March 2013, the Scheme had paid out a total of £577m to 407,000 policyholders.
Hodge described the service provided to policyholders as “unacceptably poor” and that many have not received the information to understand how their payments have been calculated.
She added: “With less than a year to go before the scheme closes in March 2014, the Treasury still has 664,200 payments worth £370m left to make. Unless the Treasury and its administrator, NS&I, get their act together there is a real risk that large numbers of policyholders will miss out. It is extraordinary that the Treasury does not intend to start publicizing the closure of the scheme until September. It must do so now.”