A report from MPs has revealed over 200,000 Equitable Life pension investors could miss out on compensation, because the redress scheme wasn’t publicised enough.
The Commons Public Accounts Committee (PAC) has admitted some Equitable Life victims are now at greater risk of remaining untraced, as the Government has set an arbitrary deadline, for the compensation scheme to come to an end, of March 2014.
The pension and investment firm, Equitable Life, failed in 2000, resulting in many investors losing significant amounts of their capital and having to cope with lower incomes in retirement. The failure led to one of the biggest scandals of its kind in the UK.
The Treasury has provided some support to the victims by setting up a compensation scheme. However, MP’s have now claimed as many as 200,000 investors could be at risk of losing their compensation, due to a lack of publicity about the scheme and the “arbitrary” deadline.
According to the PAC, the estimated number of people who might not receive compensation could be as high as 236,000.
Margaret Hodge, the Chairwomen of the PAC, said: “With less than a year to go before the scheme closes, the Treasury still has 664,200 payments worth £370 Million left to make. Unless the Treasury and its administrator, National Savings and Investments (NS&I), get their act together there is a real risk that large numbers of policyholders will miss out.” (Source: BBC)
The PAC has called on the Treasury to increase publicity now, rather than leaving it until September as is planned.
Long Delays Unacceptable
After years of government enquiries into the scandal, a compensation scheme was devised in 2010 and the first payments were made in June the following year.
The National Audit Office (NAO) has also voiced their opinion; concurring with the PAC, with both suggesting not enough work had been done to promote the initiative.
The NAO has revealed that only an estimated 35% of payments have been made, however, almost the entire administration budget has been used. By the end of March, around £577 million had been paid out to 407,000 policy holders, with more payments expected.
Again, again and again
The PAC has also revealed multiple letters had been sent to Equitable Life pension investors, requesting the same information.
Margaret Hodge said: “Hundreds of thousands of conscientious savers are losing out because of the Treasury’s failure to get a grip on the payment scheme.”
She continued: “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 spiralling costs.” (Source: BBC)
Margaret Hodge is reportedly ‘stunned’, after hearing the Treasury had deleted data provided by the Equitable Members Action Group, for almost 353,000 policy holders, under data protection grounds
A source from inside the Treasury said: “While Labour did absolutely nothing about the Equitable Life scandal for a decade, this government has allocated up to £1.5bn to help people who suffered a great injustice, with tens of thousands of policyholders receiving around £700m in payments since 2011. We make no apology for starting to get payments out the door a year after the Coalition was formed.”
“We do not agree that the government has failed to get a grip on the planning or delivery of this important work. We continue to monitor the progress of the Equitable Life Payment Scheme very closely and are working hard to maximise the numbers of people who will eventually receive payments.”
The source concluded: “Instead of scare mongering the Labour chairman of this committee should explain why her party shamefully did absolutely nothing about this scandal for a decade.” (Source: BBC)