Budget 2013: Annuities - £5,000 payout for 9,000 Equitable Life customers

Thousands of Equitable Life policyholders who were excluded from a Government compensation scheme will receive one-off payments of £5,000, it has emerged.

George Osborne said about 9,000 savers who took out with-profit policies with the failed company before 1992 will now be eligible for compensation. When the original £1.5bn payments scheme began two years ago, it only covered the 37,000 policy-holders who bought products after this date.

Equitable Life ran into difficulties in 2000 when it became clear that the company could not afford to pay guaranteed annuities. This led to it closing to new business in 2001 and policy-holders eventually saw up to 50pc wiped off the value of their investments.

Mr Osborne said the £5,000 pay-outs were "the right thing to do".

However, campaigners for the policy-holders were less enthusiastic. Paul Braithwaite, general secretary of Equitable Members' Action Group, said: "I welcome the news that the screaming injustice of the exclusion to date of Equitable Life's oldest pensioners from any compensation is to now be partially addressed."