Issued by the News Distribution Service on behalf of the Independent Commission on Equitable Life Payments
The Independent Commission on Equitable Life Payments today published a discussion paper inviting views on how funding to non with-profits annuitants should be allocated and prioritised.
The Government announced on 20 October 2010 that it will make in the region of £1.5 billion available for the Equitable Life Payments Scheme, £1 billion of which will be paid out in the first three years of the Spending Review. The Government also explained that it would cover the full cost of relative losses to policyholders with with-profits annuities and their estates.
The Commission has been asked to provide advice on how funding of £775 million over the next three years should be allocated among almost 500,000 holders of individual policies and 600,000 Group Pension policies, including whether the timing of any payments should be prioritised.
The Commission has been asked to provide its advice to the Government by the end of January 2011.
In publishing the short discussion paper, Brian Pomeroy CBE, Chair of the Commission, said:
"The Commission realises policyholders have strong views on this subject and we urge all interested parties to read the discussion paper. This is an important opportunity to make their views known on how funding to policyholders, other than with-profits annuitants, should be allocated and prioritised in the Equitable Life Payments Scheme."
Notes for Editors
1. The Independent Commission on Equitable Life Payments was announced by the Financial Secretary to the Treasury on 26 May 2010.
2. Brian Pomeroy CBE, John Tattersall and John Howard were appointed to the Commission on 22 July 2010. Brian Pomeroy is Chair of the Commission. These are unpaid appointments and the Commissioners' biographies are available on the Commission's website:http://equitablelifepayments.independent.gov.uk/who-we-are.html .
3. The Government announced on 20 October 2010 that relative losses suffered from maladministration by various public bodies in relation to Equitable Life amounted to £4.3bn. Taking affordability into account, the Government announced it would make in the region of £1.5 billion available for the Equitable Life Payments Scheme. It also announced that policyholders with with-profits annuities would have their relative losses covered in full. The Commission had no role in these decisions.
4. Following the announcement at the Spending Review, the Financial Secretary to the Treasury wrote to the Commission on 27 October 2010 with revised Terms of Reference. The Commission has no role in advising the Government in relation to with-profits annuitants or their estates, since the Government has already announced that they will have their relative losses covered in full.
5. The Commission's recommendations on how to fairly allocate and prioritise funding to policyholders must be within the £775 million limit set out in the Terms of Reference. The Government has accepted these policyholders and policies have relative losses amounting to around £3.7 billion.
6. The short discussion paper, published today by the Commission, seeks views on issues including:
* the guiding principles for determining fairness in allocating and prioritising the funding;
* whether any groups or types of policyholders, excluding with-profits annuitants, merit favourable treatment in the allocation of the funding; and whether any groups or types of policyholders, excluding with-profits annuitants, merit favourable treatment in the timing of payments.
7. The Commission is seeking the views of interested parties by 3 December 2010 and will provide its advice to the Government by the end of January 2011. The discussion paper published today is available on the Commission's website athttp://equitablelifepayments.independent.gov.uk/ .
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