Equitable Life Policyholders: Compensation

Alex Chalk Excerpts

Thursday 23rd March 2017 Commons Chamber

[Bob Blackman]

Quite clearly, there was irresponsibility. I would absolve the current leadership of Equitable Life from that, because it has been co-operative in every way. It has identified the policyholders and assisted the Government and EMAG to ensure that everyone could be compensated. That does not apply to the previous management, however.

Let us turn to the current position. I applaud the Government for honouring the pledge to provide compensation to Equitable Life policyholders immediately after the 2010 general election. At that point, £1.5 billion was set aside to provide compensation. That was too little, and there is still a debt of honour, as I have said.

There are effectively four sets of people involved. The with-profits annuitants, of whom there are 39,858, have been paid out £336 million. The pre-’92 trapped with-profits annuitants were left out of the scheme quite deliberately, because the Government took the view that anyone who took out a policy before 1 September 1992 was outside the compensation limit. That, to me, was wrong, because those people could not have known that this scandal was going on. But I am delighted that the then Chancellor provided an ex-gratia payment of £5,000 to 9,000 people and that he extended it to £10,000 for those on pension credit.

We also have the non-with-profits annuitants, of whom there are 1,000,605. They have received, thus far, £749 million, but that represents only 22.4% of their losses. That is an arbitrary number. If the Government have accepted that they are responsible for the pensions of those individuals, it cannot be right that they receive an arbitrary percentage merely because that is the balance left of the money that was set aside. All I ask is for my hon. Friend the Economic Secretary to say that the Government will keep that under review and that, as the economy recovers, the compensation should be paid out.

[Alex Chalk (Cheltenham) (Con)]

Policyholders in my constituency who did the right thing have been left in dire straits through no fault of their own. Given that even modest additional sums can make a difference, does my hon. Friend agree that it must be possible, at the very least, to do better than 22% and to link that to the improving public finances?

[Bob Blackman]

I agree with my hon. Friend that we can, and should, do better. The current position is unfair on those individuals, many of whom are approaching retirement and seeking to draw on their pension pots but do not know what security they will have in their old age. For them to get just 22.4% is absolutely unacceptable, and the battle will continue until such time as they receive the compensation that they are due.

--- Later in debate ---

[Fabian Hamilton]

I certainly do agree, and I will go on to make that point. It is the very reason I took up this cause in the first place. Like many of my colleagues, I had believed that only the wealthy invested in Equitable—people with hundreds of thousands of pounds to put into their pensions seeking to make a huge return—but I discovered that, in fact, the average pension pot was just £45,000. Ordinary people, saving £20 or £30 a month over a working life, were investing in Equitable.

[Alex Chalk]

Does the hon. Gentleman agree that there is an important business case, as it were, for the Government to do more? If people cannot support themselves without the income that they expected, the burden of doing so will fall on the state, which means there is all the more reason to do more now.

[Fabian Hamilton]

Absolutely. That is a very good point. People were encouraged to save for themselves exactly because neither the state nor the individual wanted people to have to depend on the state always coming up with the money necessary to enable them to have a full and enriching retirement. It was about self-reliance, which has been at the core of the arguments today and over many years in debates in this House. The people who were helping to provide for themselves and who were encouraged to invest in Equitable are the very people who have been let down. They are not the wealthy, but the ordinary people who were putting aside a little bit more for their retirement so they could have a comfortable retirement, and that money has now gone.