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Equitable Life policy holders disappointed at low compensation

IRISH policy holders of the near-collapsed Equitable Life have been left disappointed at the low level of compensation they are due to get from the British government.

Irish policy holders will be compensated for losing money on their investments due to British government maladministration in regulating Equitable Life.

But according to MEP Mairead McGuinness, who has championed their cause, many are bitterly disappointed that they are only getting back a fraction of what they paid over to the company.

Savers over 60 years of age who took out with-profits annuities before 1992 will be given ex-gratia payments of £5,000 (€5,894) each.

Some 6,500 Irish policy holders with pensions from Equity Life suffered losses.

More than one million British policy holders and more than 15,000 policy holders in other EU countries, including Ireland, incurred losses to their pensions, savings and investments with the near-collapse of the Equitable Life insurance company in 2000.

Letters have gone out to Irish policy holders in the past few weeks telling them they are due to be compensated. Equitable Life was once regarded as the best-managed private pension company in the UK.

But it got into trouble in 2000 when it emerged that the company could not afford to pay guaranteed annuities.

It was forced to honour guarantees made on older pension policies leading to cuts in the value of thousands of members' policies.

The Equitable Life Payment Scheme was set up by the British government in 2010 to compensate policy holders who suffered financial losses as a result of government maladministration in the regulation of Equitable Life.

The British government initially agreed that 1.5 million savers should be offered £1.5bn between them – this is less than a third of the estimated losses for the policy holders.

However, those who took their pensions before 1992 were excluded from this compensation payment.

But a recent decision meant the numbers receiving compensation has been expanded.

Obligation

British Chancellor George Osborne said the government was under no legal obligation to make the payments: "We are doing this because it is simply the right thing to do."

It is estimated policy holders at Equitable Life have lost £4.3bn compared with holding their money with another institution.

The European Parliament, of which Ms McGuinness was a member, held the inquiry into the company and recommended full compensation by the UK government for all the victims.

The Equitable Life payment scheme was set up by the British government to compensate those who had lost out. By the end of January this year, 95,601 policy holders had received compensation totalling £70.7m.

The UK treasury says this equates to 20pc of all individual policy holders due a payment from the scheme.

Irish Independent