Guidance

Equitable Life Payment Scheme

Find out more information on the Equitable Life Payment Scheme.

Closure of the scheme to new claims

As announced by the Chancellor in the Summer Budget 2015, the Equitable Life Payment Scheme closed to new claims on 31 December 2015.

It closed to all correspondence on 29 February 2016, except for complaints relating to payments received after 29 January. These policyholders will have one month from the date of their payment letter to lodge a complaint.

All claims begun by 31 December will still be processed, and the annual payments to With-Profits Annuitants will continue unaffected.

If you have received a payment from the scheme, you must cash it within 3 months from the date of issue.

The scheme, which began making payments in 2011, has paid out over £1.08 billion to nearly 90% of eligible policyholders. For more details on what the scheme has achieved, read the November 2015 Progress Report.

The Chancellor announced in Summer Budget 2015 that as part of the closure of the scheme, additional payments would be made to policyholders in receipt of Pension Credit who received a lump sum payment under the scheme. The amount of the additional payment will be equivalent to the 22.4% of relative loss payment already received.

For documents relating to the Equitable Life Payment Scheme, including past progress reports and information on the design of the scheme, consult the document collection.

Further payments to policyholders on Pension Credit

In the Summer Budget 2015 the Chancellor announced that a further payment would be made by the scheme to non-WPA policyholders in receipt of Pension Credit (With-Profits Annuitants are not eligible as they received 100% of their relative losses). Below are some points that may be helpful in understanding whether you may be eligible for a further payment.

Extra payment and eligibility explained

An extra payment is being made in early 2016 to non-WPA policyholders who have already received 22.4% of their relative losses from the scheme and are in receipt of Pension Credit. This payment will be an additional 22.4% of an individual’s relative loss, meaning that eligible policyholders on Pension Credit will receive a total of 44.8% of their relative losses from the scheme.

Policyholders due a payment of 22.4% who have not been contacted but applied to the scheme before 31 December 2015, provided they are receiving Pension Credit will also receive an additional payment.

How to receive the extra payment

Policyholders don’t need to do anything. The scheme will verify all non-WPA policyholder information with the DWP in early 2016. The scheme will use the contact details it holds for these policyholders to issue the warrants for the payments. If you have changed your address since your last payment from the scheme, please inform us in writing as soon as possible so we can ensure you are paid swiftly.

Any policyholder who is in receipt of Pension Credit as at 31 December 2015 and has not received an additional payment by 31 March 2016 should contact the scheme before 30 April 2016. Contact should be made in writing and evidence in the form of the original Pension Credit award letter sent by DWP must be provided, as well as the Equitable Life policy number and National Insurance number.

Pension Credit eligibility

The scheme is unable to verify whether a policyholder eligible to claim Pension Credit, the best way to find out is by calling the Pension Credit claim line on 0800 99 1234. Information that needs to be provided includes National Insurance number, information about income, savings and investments, and bank account details.

Eligibility for extra payment

Only policyholders who have received 22.4% of their relative losses and who are also in receipt of Pension Credit (either Guarantee credit, Savings credit or both) will be eligible for an extra payment.

No further payments will be made to other policyholders. This means there is no change to the payments made to With-Profits Annuitants (WPAs), non-annuitants who do not receive Pension Credit and Pre-September 1992 With-Profit Annuitants.

For further details about Pension Credit, policyholders can call the Pension Credit claim line on 0800 99 1234.

Administration of payments

The additional payments will be issued by the scheme in the same way as the first payment, by the scheme sending a warrant (like a cheque) in the post in early 2016. If your address has changed since your last payment from the scheme, please inform us in writing as soon as possible.

Contact the scheme

The scheme closed to all new claims on 31 December 2015. If you have not yet made initial contact with the scheme and informed them of your Equitable Life policy number, it is now too late to do so.

The scheme closed to correspondence on 29 February 2016. However, if you receive a payment from the scheme dated after 29 January 2016, you will have one month from the date of that payment to raise your query or complaint to the scheme.

If you have any queries or complaints about the additional payments to policyholders on Pension Credit, you must contact the scheme in writing by 30 April 2016.

The scheme cannot respond to claims or queries received after these dates.

By phone

UK policyholders: 0300 0200 150

Overseas policyholders: +44 (0)141 232 1377

Call centre opening hours:

Monday and Tuesday: 9.00 to 17.30

Wednesday to Friday: 9.00 to 15.00

By post

Please write to the scheme at:

Equitable Life Payment Scheme
PO Box 4110
Glasgow
G58 1EL

Please quote your full name, address and your Equitable Life policy number in all correspondence.

If your circumstances change

If you need to inform the scheme of any change in your situation, the scheme may ask you to provide proof of address and identity by post.

The scheme may ask for certified copies of original documents in a number of circumstances, including:

  • a change of name or address
  • the death of one or more named individual on a policy
  • implementation of a Power of Attorney
  • a recalculation

Policyholders who are requested to provide information or documentation by the scheme should send this information within 2 weeks of the request. Representatives of deceased policyholders, because of the administrative arrangements they face, should respond within 1 calendar month of the date of a request from the scheme. This is so that the scheme is able to process and issue payments efficiently as it closes down.

Policyholders experiencing difficulty in providing the information or documentation requested in should contact the scheme to ensure their payment can be processed as quickly as possible.

Documents that can be used as proof of address and identity

Complaints about your payment or about the scheme

If you have a complaint about the way the scheme’s rules have been applied or how the scheme has handled your case, or you think the amount you have been paid is incorrect, you should write to the scheme’s complaints department with details of your complaint before the relevant date above. The address to write to is:

Complaints department
Equitable Life Payment Scheme
PO Box 4110
Glasgow
G58 1EL

The scheme cannot alter the method used to calculate your payment. The scheme can only recalculate your payment if you are able to provide supplementary information to the information the scheme already holds. To check that the scheme holds all the correct information for your policy, you should write to the scheme to ask for your Core Data Report. You can then compare this against your own policy records, and provide evidence to the scheme of any inconsistencies you may identify.

The scheme will acknowledge the complaint within 5 working days and aim to resolve the complaint within 8 weeks. A full investigation of the problem you have raised will be carried out and the scheme will write to you to let you know the outcome.

If you are unhappy with the outcome and the scheme can assist you no further in resolving the complaint, you may request the Independent Review Panel to consider your case. The Independent Review Panel provides a final review process to people who have not been able to resolve their complaint through the scheme’s complaints process.

You will receive an Independent Review Panel referral number and a form to complete to send to the review panel. The review panel will then correspond with you directly. Policyholders have 1 calendar month from the date of the issue of the referral number to request a review from the Independent Review Panel.

Please note that the Independent Review Panel cannot consider your case until you have completed the Equitable Life Payment Scheme complaints process. All contact with the panel must be in writing.

Information for With-Profits Annuitants (WPAs)

The annual payments already being made to With-Profit Annuitants will continue for the duration of the annuity and are not affected by the scheme’s closure to new claims. The closure period concerns the scheme ceasing to process new claims, and the related queries, complaints and appeals.

Eligible policies

You are eligible for the Equitable Life Payment Scheme if you hold, or have held, one or more of these policies:

  • Equitable Life Conventional With-Profits (CWP) policy bought between 1 September 1992 and 31 December 2000 inclusive
  • Equitable Life Accumulating With-Profits (AWP) policy (both individual and group scheme policies) that either started between 1 September 1992 and 31 December 2000 inclusive, or had at least 1 premium paid into it between 1 January 1993 and 31 December 2000 inclusive
  • Equitable Life WPA (With-Profits annuity) policy bought between 1 September 1992 and 31 December 2000 inclusive

For further details on the types of policies that were eligible for the scheme, please refer to the product table or The Equitable Life Payment Scheme design.

Payments made by the scheme

How the scheme calculates payments

The scheme calculates a payment amount for every eligible policy based on any relative loss which that policy has made.

Relative loss

The concept of relative loss was introduced in the Parliamentary Ombudsman’s 2008 report on the Equitable Life Payment Scheme. It is the difference between the value of an actual Equitable Life policy and the value of a notional policy which the policyholder might have held had the investment been made in a similar product in a comparator company.

This concept is based on the understanding that those choosing to invest in Equitable Life, who had relied on the regulatory returns that were subject to government maladministration, had lost the opportunity to make a fully informed decision. It follows that, had they had this opportunity, they might have invested elsewhere. Government maladministration was identified as having affected policyholders’ investment decisions between September 1992 and December 2000. This means that a policyholder’s relative loss only applies to returns received from investment decisions from this period.

The scheme first looks at a range of alternative With-Profits companies that offered the appropriate mix of With-Profits business over the period in question, in order to calculate a comparable fund value. This value is then compared with your own fund value to calculate your relative loss.

  • If the value of the Equitable Life policy is less than it would have been with a comparable company, the policy would be deemed to have made a relative loss.
  • If the value of the Equitable Life policy is greater than it would have been with a comparable company, the policy would be deemed to have made a relative gain.

Policies may have made a relative loss or a relative gain depending on how they performed compared to similar products with comparable companies. Only those policies that have made a relative loss will receive a payment.

For holders of AWP or CWP policies (both individual and group scheme policies)

If your policy ended before 31 December 2009, then the scheme takes the relative loss value accrued in the eligible period and applies a fixed 4% per year interest up until 31 December 2009, to work out your total relative loss.

You will receive a pro-rata amount of this total relative loss. The pro-rata has been set at 22.4% following the advice of the Independent Commission on Equitable Life Payments. This is to be fair to taxpayers as well as policyholders.

If 22.4% of your total relative loss is less than £10 then no payment will be made. This is to avoid disproportionate administration costs.

If you have more than one AWP or CWP policy then relative losses will be offset against relative gains on all of these policies. This means that any relative loss would be reduced if you have other policies that have made a gain.

The scheme has prepared an illustrative guide on how payments to AWP policyholders are calculated.

A simplified overview of the payment calculation for AWP policies and accompanying examples are available to help policyholders who may be seeking a better understanding of how the scheme has calculated their payments.

For holders of With-Profits Annuities

Relative losses on With-Profits Annuities (WPAs) will be covered in full; they are not subject to any pro-rata of 22.4%. This is because holders of these policies were found to be more vulnerable to their losses than other policyholders, as they were unable to withdraw from this type of policies.

Your relative loss is calculated by comparing the annuity payments you would have received or are expected to receive from a comparable policy, with the payments you actually received or would be expected to receive from the Equitable Life policy.

The relative loss may include past losses and future losses.

  • past losses are the difference between the actual payout received between 1 January 1993 and 31 December 2009, and the annuity payments that a sample of similar with-profits companies would have paid on similar products. The comparable products were chosen from alternative companies offering WPA policies (during the period in question) in which you might have invested had you not chosen Equitable Life
  • To calculate future losses, it is necessary to make assumptions about future bonus rates beyond 31 December 2009, so the actual and comparable payouts are estimated annuity payments that are assumed to be paid after 31 December 2009

The scheme has prepared a number of illustrations of relative loss for WPAs. The graphs available are intended as indicative illustrations of the relative loss calculation.

For more detailed information about how the scheme calculates payments in relation to the relative loss, please refer to The Equitable Life Payment Scheme design.

How payments are issued

For holders of AWP or CWP policies (both individual and group scheme policies)

You will receive any payment due in a lump sum via warrant. A warrant works like a cheque. On receiving a warrant by post, you should pay it into your bank within 3 months, as you would a cheque.

If you are due payments on multiple AWP or CWP policies, you will receive all your payments in a single lump sum where possible. However, payments made on a group scheme policy will be made separately from those on individual AWP or CWP policies.

For holders of With-Profits Annuities

As a With-Profits Annuity (WPA) policyholder, you will receive your entitlement for past losses in 5 equal annual payments, and for future losses through regular annual payments, one year in arrears, for the duration of your annuity. Payments will be made annually for policies that have at least one surviving annuitant. Initial payments will be made by warrant, provided the policyholder can be identified and traced. Thereafter, payments are scheduled to be made annually by bank transfer in May each year.

Making regular payments mirrors the income you would have received from your Equitable Life policy. Paying WPA past losses more quickly would ‘eat into’ the funds available for other policyholders. It also enables the government to continue funding payments beyond the current Spending Review period.

Payments to a third party (not the policyholder)

In some cases the holder of the policy will not be the payee (ie the person that receives scheme payments). This is because, in these cases, the person who took out the policy or paid premiums in connection with it is not the person who has suffered a relative loss. More information about such cases is available in The Equitable Life Payment Scheme design, or by writing to the scheme.

Tax and benefit treatment of payments from the scheme

Payments that the scheme authorises are not subject to UK Income Tax, Capital Gains Tax, or (in the case of companies) Corporation Tax. This means you do not need to declare them to HM Revenue & Customs. Furthermore, payments made directly to estates of deceased eligible policyholders are not subject to Inheritance Tax.

Payments to non-UK policyholders

For all policyholders holders of AWP or CWP policies (both individual and group scheme policies)

If you live outside the UK but bought your policy in £ sterling, you will receive a £ sterling warrant if you are due a payment.

If you bought your policy in a foreign currency, ie, pre-euro currencies, euros or US dollars, then your relative loss has been calculated in the currency in which it was bought and then converted into pounds sterling using the exchange rates applicable at 31 December 2009. This is the amount the scheme will pay you in the form of a £ sterling warrant if you are due a payment from the scheme.

For holders of With-Profits Annuities

You will receive your annual payments by £ sterling warrant, rather than electronically.

Payments to estate of deceased policyholders

Executor of a deceased policyholder

If you are an executor or administrator of an eligible estate and you have not heard anything from the scheme, you should contact the scheme as soon as possible on 0300 0200 150 to confirm the eligibility of the policy in question. You will then be advised of the next steps to take.

Representatives or executors requested to provide information or documentation by the scheme must send this information within 1 calendar month of the date of the request. This is so that the scheme is able to process and issue payments efficiently as it closes down.

Policyholders experiencing difficulty in providing the information or documentation requested in should contact the scheme to ensure their payment can be processed before the scheme closes.

Payments to estates of deceased policyholders

As with all other cases, the scheme closed to queries or complaints from representatives of estates on 29 February 2016.

However, representatives who receive a payment from the scheme dated after 29 January 2016 will have 1 month from the date of that payment to raise their query or complaint to the scheme.

The scheme cannot respond to claims or queries received outside these dates.

Where the payee on a policy has died, his or her estate becomes the payee. In practice this means making payment to the executor or administrator of the estate. However, there are further rules surrounding payments issued in relation to deceased With-Profits Annuitants.

  • for single life annuities, if the policyholder dies during the 5 year period in which payments for past loss are being made, the estate of the policyholder will then receive the remainder of any unpaid past loss and any remaining unpaid future loss, to date of death (or fixed guarantee term), as a lump sum
  • for joint life annuities, if the first annuitant on the policy dies, the estate of the first annuitant will receive the remainder of any unpaid past loss and any remaining unpaid accrued future loss as a lump sum. If there is a surviving second annuitant for whom future losses then start to accrue, the payment of these losses will begin to be paid to the second annuitant one year in arrears. On the death of the second annuitant, any remaining unpaid future losses will be paid to the estate of that annuitant

Group (company pension) scheme policies

Over 400,000 AWP and CWP policies were taken out not by individuals but as part of group schemes, which were often but not exclusively run by employers. The scheme has specific policies for making payments in respect of these cases.

Who the scheme pays in relation to group scheme policies

The scheme has the following criteria for identifying the appropriate payee for group policies:

  • for defined benefit schemes, the trustees of the group scheme are the payees
  • for defined contribution schemes, the individual members of those group schemes are the payees, except where Equitable Life has no records of the individual members within the group scheme. In this situation, the trustees of the group scheme will be the payees. The trustee will act as a paying agent to the individual members of the group scheme and they must hold the authorised payment separately from the actual pension fund

Furthermore, where a person who would have been due a payment is deceased, the scheme makes payments to that person’s estate.

An A-Z list of group (company pension) schemes is provided so that you can find out which group schemes are covered by the scheme.

Background to the scheme

How the scheme traces eligible policyholders

The scheme has gathered data for eligible policyholders from Equitable Life (and the Prudential Assurance Society, for WPAs transferred to them). Due to the age of the data the scheme has adopted a rigorous process for verifying the addresses of policyholders to ensure payments are made to the correct people at the correct address. This involves checking against records such as the electoral roll, the phone book and credit histories. If someone cannot be verified against these various registers then the scheme may contact them and ask for further proof of identity before making payment.

Tracing estates of deceased policyholders

The scheme is tracing and contacting the executors and administrators of the estates of eligible policyholders who died before the scheme began making payments in June 2011. In the majority of cases it is expected that this contact will enable the scheme to make payment to the executor or administrator, but there may be some cases where this is not possible. These will be resolved on a case-by-case basis.

Tracing group scheme policyholders

When the scheme launched in 2011, there were additional complexities in retrieving the contact details of those policyholders who bought their policy through a group (company pension) scheme, because Equitable Life did not hold contact details for many of these policyholders. To address this issue, the Scheme wrote to Trustees and worked with large administration companies in order to obtain the most up-to-date contact details for members who are due a payment.

The scheme has now written to all 5,700 eligible group schemes and the portal for group scheme trustees to return members’ details is now closed. Whilst the scheme received a high number of responses, some group schemes did not respond. Through these efforts, alongside the scheme’s tracing methods, over 85% of all group scheme policyholders have been paid.

Operating the scheme

National Savings and Investments (NS&I) was chosen by HM Treasury to process payments and services for the Equitable Life Payment Scheme. This decision was taken because NS&I, through its outsourced partner Atos, provides similar banking services to its customers, and so can provide a cost effective service to the taxpayer.

NS&I cannot give advice or information on individual cases for the scheme. It has no influence on the amount paid. The records for Equitable Life policyholders are secure and kept separately from those of NS&I customers.

Pre-1992 With-Profits Annuities (WPAs)

The Equitable Life Payment Scheme only covers policies issued after 1 September 1992. In December 2013 HM Treasury issued payments to all pre-September 1992 annuitants who were eligible under the separate scheme announced in the 2013 Budget Statement.