It was announced in this year’s Budget that people who bought a with-profits annuity from the Equitable Life Assurance Society before September 1992 – and were aged 60 or older on 20 March 2013 – would receive an ex-gratia payment of £5,000. Payments were planned for the 2014/15 tax year but have now been brought forward to this tax year instead.
The Equitable Life Assurance Society almost collapsed in 2000 and many savers saw the value of their savings funds drastically reduced. As a result, those with a ‘with-profits annuity’ – where the fund remains invested – saw their retirement incomes slashed.
An estimated 10,000-11,000 policyholders will qualify for the one-off payment. An extra £5,000 will be paid to anybody who meets the criteria and is also receiving Pension Credit when the payments are made.
Sajid Javid, economic secretary to the Treasury, said the Government was helping to compensate those who had ‘suffered an injustice’ and that he was “delighted to say that we now intend to make these payments in the current financial year.”