In his Comprehensive Spending Review (CSR), Chancellor George Osborne announced that £1.5 billion will be available to compensate Equitable Life policyholders.
The full cost of losses to ‘with-profits annuity’ policyholders, which amounts to approximately £620 million, will be covered by the government.
Osborne recognised that these policyholders were hit the hardest when Equitable Life nearly collapsed in 2000, as they were unable to move their funds elsewhere or cover their losses through employment.
Osborne announced that £1 billion will be allocated to cover the first three years payment to those with ‘with-profits annuity’ policies and lump sum payments to all other policyholders.
The compensation amount is based on a relative loss of £4.3 billion – the difference between the amount invested by policyholders from the end of 1992 onwards, and what they would have received if they had invested elsewhere.
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