People who suffered losses as a result of the collapse of mutual insurer Equitable Life in 2000 will be pleased to know that the compensation payments they receive as a result of the passing of the Equitable Life (Payments) Act 2010 will be tax free.
The compensation on offer amounts to only 22 per cent of the amount lost, and where the policyholder’s loss is deemed to be less than £10, no compensation is payable. The first payments were made in June 2011.
Equitable Life closed to business after the House of Lords ruled that it should be forced to honour pension policies that had a guaranteed minimum payout.
As a result of the collapse, the insurer has followed a process of restructuring and has sold off many of its interests. It is no longer open to new business but continues to manage the policies of its members.