Insurance

The 9000 most elderly surviving policyholders in Equitable Life are at last to receive some compensation for the society's maladministration, though not full redress.

Those who took their pensions before 1992 were excluded when the UK Government announced in 2011 that 37,000 pensioners locked into Equitable after its near-collapse in 2000 would receive most of a £1.4 billion compensation package, agreed after 10 years of official reports eventually proved government maladministration.

In his Budget speech, the Chancellor said he was "proud to be part of a Government that has helped compensate policyholders of Equitable Life who had suffered a great injustice", but admitted it had excluded the thousands who, if still alive, are now aged 85 and over.

He said: "We will make ex-gratia payments of £5000 to those elderly policyholders, and we'll make an extra £5000 available to those on the lowest incomes who are on pension credit. We are not doing this because we're legally obliged to, we are doing it because it's the right thing to do."

There will, however, be a further delay until 2014.

Paul Braithwaite, general secretary of Equitable Members Action Group (Emag), said: "I welcome the news that the screaming injustice of the exclusion to date of Equitable Life's oldest pensioners from any compensation is to now be partially addressed."

But Emag claimed the £45m outlay would only cover, on average, about 30% of pensioners' losses to date and would not recompense for future pension falls in the same way as official payouts.

An independent report in 2011 by former Scottish Widows chief actuary David Forfar – commissioned by the 50,000-member Emag – concluded that "post-maladministration payments of both groups of annuitants have suffered in the same adverse way from the same maladministration and the same entrapment".

His report contradicted the technical reasons given in the Commons by Financial Secretary Mark Hoban for excluding the pre-1992 policyholders.

Emag's Paul Weir said the payments are not due until 2014, which would be little consolation to people in their 80s who had seen their pensions shrinking for a decade.

He added: "The flat-rate approach has the benefit of speed and simplicity, but is rough justice for those who have lost considerably more. We called on the Government to compensate on the same terms as the rest – this seems more like a universal winter fuel payment on steroids."