For a decade now I have been the general secretary of EMAG, the Equitable Members’ Action Group, a campaigning group for those who lost out because of maladministration and regulatory failure at the once venerable insurance firm Equitable Life. Our pursuit of justice for Equitable Life policyholders started in the summer of 2000. Shortly after, Vince Cable took up the cause and together we walked to Downing Street to deliver a protest letter to Gordon Brown on 6th August, 2001. It was the start of my personal politicisation and I became a Liberal Democrat Councillor in Camden in 2006. I’m still there!
Over the decade the Lib Dems fought Equitable policyholders’ just cause and kept the issue alive. In the last year of the last Parliament Vince sponsored an early day motion about Equitable. It was the single most successful EDM of its session with support from 351 MPs. The Lib Dems can be proud of that decade of driving the opposition to Labour on Equitable Life. I was proud of my party.
At last year’s general election the vast majority of the party’s candidates signed EMAG’s pledge to provide fair compensation. In something of a familiar tale it went pear shaped after the election. Essentially, resolution was agreed and trusted to Tory minister Mark Hoban and the Treasury to sort and pay out “swift, fair and transparent compensation.” A year on, it is none of those things. In particular, there has been a ghastly injustice perpetrated against 10,000 of the very oldest and frailest surviving “with-profits” annuitants – who are being unfairly excluded from any compensation whatsoever.
Sadly many Lib Dem MPs were inadvertently party to this. When the Equitable Life (Payments) Bill was debated in the Commons last November a cross-party group of MPs – Stephen Lloyd, Fabian Hamilton and Bob Blackman – tabled an amendment to add these people back into the scheme on the same terms, at a likely extra cost of about £150 million. Unfortunately, when the division bell went, 43 Lib Dem MPs voted against this humane amendment. I believe they were under the false impression that they were voting positively to enable payment of compensation – but that was not the case.
Right now I find myself embarrassed that my party appears to have abdicated interest in Equitable Life since the Chancellor’s autumn statement in the mistaken belief the problem has been “sorted”. It has not. EMAG’s campaigning continues and there is still the opportunity for the Lib Dems to regain the moral high ground.
My local party in Camden has submitted a policy motion for debate in the Birmingham conference. It calls on the Lib Dems in Parliament to right this injustice by including the 10,000 in the compensation scheme. The Federal Conference Committee will decide if the motion will be heard by conference on Saturday 9th July. I ask them to recognise the political importance of this issue and allow conference its say. We should make achieving fair compensation something we Lib Dems can be proud of. I hope I can count on your support.
Paul Braithwaite is a Liberal Democrat Councillor in Cantelowes ward, London Borough of Camden.
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4 Comments
How has the injustice incurred to the 10,000 `frailest and oldest’ former Equitable Life `annuitants’? Surely,this matter should have been dealt with, since 2001, in a `transparent and fair’ way?
I felt completely cheated by the Coalition when they put in the sneaky little clause to refuse any compensation to anyone whose pension fund was started before 1992. It was in 1987 when my final salary fund was transferred from my employer to Equitable Life. The offer was a pension of aroun £14,000 which could be drawn some time after 2009. Now I have not drawn anything yet. The fund has done so badly that their quote of what they would actually pay me is now around £1,400, a loss of 90%! This loss is due to the mismanagement of Equitable from 1987 to 2011, but the Coalition’s clause is designed to ensure that I get NOTHING in compensation. In this way, millions are saved by cheating a whole set of the older policyholders.
What a naive optimist is Patrick Smith!
It’s taken 13 enquiries and enormous patience to keep on and on to seek to redress the failure of the financial regulators and FINALLY a £1,500,000,000 compensation package was agreed in the CSR last October. But the 10,000 oldest (average age 85) were unfairly excluded on a pathetic legalistic excuse. These people who took out their pensions before 1992 have, on average, seen their annual pension payment reduced from about £7,000 pa to £3,000. Whilst their slightly younger peers are to get 100% compensation for life. And they’ve both suffered exactly the same consequences of maladministration. And there’s an unallocated £100m in the compensation pot. we HAVE to show some compassion – unlike Tory minister Mark Hoban.
I think it is worth looking back at how different the pension world was in 1992. The usual worry about pension schemes then was that they were OVER-funded. Conventional actuarial advice led to many schemes reducing both employee and employer contribution rates. Employers offered redundancy through early retirement, thus transferring some of the cost to the pension schemes. It seemed pretty clear to me at the time, that worse times for pension schemes were coming as the age distribution of members and the population as a whole shifted. But I couldn’t anticipate the act of a later Chancellor in changing the tax regime of pension funds and destabilising the whole occupational pension system.
Equitable Life was a market leader, offering better rates than its rivals and was widely recommended by financial advisors. It seemed very solid, and basked in its more than two centuries of history and its mutual status. It provided AVC pensions for highly thought of employer pension schemes, such as the BBC.
Obviously the then management of Equitable was recklessly misreading the situation, but so were the actuaries and the regulators, if any. The government was looking to occupational and private pensions to reduce pressure on the state system, but this required more interest in the workings of the systems that the traditional one of checkeing that the tax laws wer being observed.
Government has a history of meanness towards the very old (85+). Perhaps someone calculates that there potential for causing trouble is limited both by failing powers and detemination and the short time available to them.