By ADRIAN LOWCOCK 26/10/2010
In last week’s spending review, the Government announced it will support a £1.5 billion compensation package for policyholders of Equitable Life.
The package offered by the Government is below the £4 - £5 billion suggested by some policyholders. Elderly, with-profits pension investors will be the beneficiaries of the most generous payouts, i.e. those who were hardest hit, because they have started taking their pension. The first payouts will be made in the middle of 2011.
There are also approximately 37,000 people who hold with-profits annuities (WPAs) who made their initial investment after September 1992. These investors will receive regular payments for their lifetime, which is estimated to cost the Government £620 million per annum.
Equitable Life, Britain’s oldest mutual assurer, almost collapsed following a ruling by the House of Lords in 2000 stating that it will have to honour thousands of unprofitable policies it had sold in the 1980’s.
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