Fifth of Equitable savers miss payments

The Treasury has been described as "disgraceful" for the way it has mishandled a scheme to make payments to former policyholders of Equitable Life.

In a stinging report published today, the National Audit Office reveals that because of "mistakes and delays" the Treasury will fail to find and compensate up to a fifth of eligible Equitable savers.

The report also shows that with just a year of the scheme to go, there are still 664,000 payments to be made.

Margaret Hodge, who chairs the Public Accounts Committee, said that problems began because the Treasury tried to rush the start of making payments before it had done enough work. "As a result there have been mistakes and delays," she said.

"Given the Government's commitment to repay everyone eligible under the scheme it is disgraceful they will never pay up to 20 per cent of former policyholders because they can't find them."

Despite the first payments being rushed through by July 2011 to meet a Coalition commitment, only 407,000 payments had been made by the end of March 2013, despite there being 1.46 million eligible policyholders.

"I dread to think how many people have died waiting for payouts," Paul Weir of the Equitable Members' Action Group said. "It's probably going to be close to 40,000-50,000 by the time the scheme closes."

Amyas Morse, the head of the National Audit Office, said: "The Treasury needs to produce a realistic plan indicating how and by when they will make the remaining, more difficult, payments."

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 policyholders eventually saw up to 50 per cent wiped off the value of their investments.