Employers have been warned not to raise their hopes of claiming compensation from the government after the publication of a damning report by the Parliamentary Ombudsman into the handling by regulators of the near-collapse of Equitable Life.
The report, published last month, said government regulatory bodies were guilty of maladministration before the near-collapse of Equitable Life in 2001. The Ombudsman recommends that the government should compensate those affected by the maladministration within the next two years.
Employers with trust-based defined contribution pension schemes and defined benefit pension schemes that included investments with Equitable Life may have had to make provision for additional funding because of the insurance company’s crisis and could, in theory, now consider seeking compensation from the government.
Colin Marsh, director of HR Trustees, said: “We have schemes where trustees are seeking legal advice about action and there is interest from employers as to what compensation they can recover. However, this will be a long, drawn-out process. I don’t know how many employers will be able to get compensation and I wouldn’t want to raise expectations.”
The issue is further complicated by the fact that at the time of Equitable Life’s problems, a number of schemes affected signed a compromise agreement offering some level of compensation for their loss.