Equitable Life payout 'an insult'
They are delighted that the Government has finally acknowledged culpability, but have dismissed the compensation package outlined in Westminster on Thursday as a "cynical manoeuvre" designed to once again kick the issue into the long grass.
Former society member Paul Weir, who was encouraged to invest shortly before the company collapsed, said: "We have been sold down the river again. This isn't compensation, it is charity to keep the most badly hit out of the workhouse. It is an insult."
Around a million investors have been battling for 5bn in compensation since 2000, when the company shut up shop.
It was on the verge of bankruptcy, having sold pension guarantees it could not afford, and lost a House of Lords battle it had hoped would let it renege on those contracts.
In the months that followed, policy values were slashed in a series of swingeing cuts designed to keep the company afloat. Many members lost a third of their investments. The pensions of some with-profits annuitants were slashed in half.
Initially, and for many years, the Government steadfastly rejected any suggestion that regulators had failed and rebuffed claims for compensation, despite a report from Lord Penrose pointing to failures at the Government Actuary's Department, and the damning conclusions last summer of a four-year investigation by the Parliamentary Ombudsman Ann Abraham.
But on Thursday they finally admitted the Government's regulators had made mistakes. And Treasury minister Yvette Cooper acknowledged that this failure had been partly to blame for their losses, which had left many in penury in old age.
She apologised to victims and said compensation would be forthcoming, as Abraham had recommended – but only to those who had lost the most and were now in greatest financial difficulty.
In fact, she rejected Abraham's recommendation that an independent tribunal should be set up to fairly assess all individual claims.
Instead, the Treasury has asked former Lord Justice of the Court of Appeal, Sir John Chadwick, to advise on how compensation could be made, according to a very restrictive brief given to him by ministers.
While Cooper accepted that regulatory failure had contributed to their losses, she argued that culpability on the part of others, such as the society's management, should not leave the Government shouldering full liability.
On this basis, and with an eye to protecting other taxpayers, Cooper indicated compensation would be limited to those facing the biggest hardship and who have suffered a "disproportional impact".
Policyholders reacted angrily. Liz Kwantes, a member of the Equitable Members Action Group, said: "It is just a matter of stringing the whole thing out for years yet. Anyway, how will they decide who is the most disadvantaged? How do they know what other pensions people might have?
"Does this mean we will all have to engage in endless form-filling? What if you don't want to fill in a form, or if you are too old or infirm to be able to do so?"
The precise brief given to Sir John Chadwick will be to advise on:
&149 the extent of relative loss;
&149 the proportion of those losses which should be attributed to (a) the maladministration accepted by the Government; and (b) the actions of Equitable Life and others;
&149 which policyholders have suffered the greatest impact;
any factors the Government might take into account when reaching a final view on "disproportionate impact".
It will probably take him many months to set up his office and acquire a staff, and years before he is in a position to make any sensible recommendations.
Meanwhile, policyholders are in the dark. No fund has been announced, nor any timetable, so it is impossible to know who if anyone will receive redress.
However, Cooper indicated that someone who was still in work and able to repair damage to his or her pension by saving more now would not be looked upon sympathetically. In other words, they are not a priority and may get little or nothing. Similarly, anyone with other investments or sources of pension will not be considered a deserving case.
MPs on all sides of the house called for interim payments for the very elderly, poor, frail or ill. Yet while Cooper did not rule them out, she indicated there could be practical difficulties which might delay settlements.
MPs also asked about the treatment of the 30,000 policyholders who have died. Cooper was unable to promise that estates would benefit if it was at the expense of the taxpayer, but she did indicate that widows and widowers might be helped if they were disproportionately impacted.
'Disgusting' response to victims
PETER Metcalf from East Lothian worked more than 60 hours a week for 35 years to build up a business, writes Teresa Hunter.
He said: "When you are building something from scratch there is no money to save as you go along. You end up putting in big amounts into your pension over a few years in the run-up to retirement."
Knowing this was money he could not afford to lose, he did his homework. "Equitable was the most reputable company at the time, and considered the safest place you could invest. I couldn't afford to take any risks, so I researched where to invest for months and took a great deal of advice. Everything pointed to Equitable."
He is disgusted by the Government's offer of compensation last week, hedged as it is with exclusions and caveats.
He said: "When Iceland went down, even though people were chasing an easy buck investing in another country, they got it all back straight away. But we are told we may not get anything unless we are suffering hardship. The words which worry me most are 'some', 'partial' and 'disproportionally disadvantaged'.
"The Government has finally had to admit it is responsible, but this offer of compensation is no more than a gesture to that culpability. It's a hardship fund. But we are all deserving cases."
Peter, 57, had planned, after a lifetime of hard slog, to retire at 50. Equitable put paid to that and he can still see no sign of retirement.