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The Actuary The magazine of the Institute & Faculty of Actuaries

Treasury sets out details of Equitable Life payment scheme

The details of how the Government scheme to make payments to Equitable Life policyholders will work were published by Mark Hoban MP, financial secretary to the Treasury, today.

The Equitable Life Payment Scheme design document includes the scheme rules, administration and timetable, the methodology behind loss and payment calculations, details of the queries and complaints procedure, and plans for communicating with policyholders.

Mr Hoban said that the scheme design reflects an actuarial analysis carried out by Towers Watson, together with the evidence and arguments received in response to the Government’s call for representations following the publication of Sir John Chadwick’s advice, and the recommendations of the Independent Commission on Equitable Life Payments.

It was also confirmed that with-profits annuity policyholders will have their losses covered in full, and that scheme payments will be free of tax and will not affect eligibility for tax credits, in line with previous announcements.

The Government’s Spending Review on 20 October 2010 announced that in the region of £1.5 billion would be available for the payment scheme, £1 billion of which would be paid out upfront over the first three years of the Spending Review period.

Mr Hoban confirmed that the Scheme is on track to make the first payments before the end of June.

He said: "Today, I am setting out the design of the Equitable Life Payment Scheme for Parliament, policyholders and all other interested parties to see. This is a complex issue, but the scheme has been designed to reflect the principles of fairness, transparency and simplicity."