PRIME MINISTER Tony Blair yesterday slashed former and current Equitable Life policyholders' last bit of hope after he ruled out government compensation, saying it would not be financially possible.
The Daily Telegraph says Blair completely crushed the idea of the government paying compensation for investors who lost money as a result of the near-collapse of Equitable Life after he deemed the 'pay-out' could run into billions of pounds.
Defending his view, he also claimed no other major parties were committed to compensating people who lost money in the affair.
He said: "It is not actually sympathy these people need. It is help. Now we are looking to see what sort of help we can properly give them.
"But I don't think it would be responsible for me or anyone else to say we were in a position to underwrite the entirety of the loss from people from Equitable Life," he added.
That said, furious policyholders have already filed a formal complaint with the European Commission, which they hope will force the UK government to pay compensation.
WHILE TONY Blair and the government washes their hands free of blame, their plans to reform the UK pension system seem to be fallen apart after it emerged insurance companies are refusing to offer thousands of companies access to stakeholder schemes.
The Times says some of the country’s biggest insurance companies, including Norwich Union, Prudential and Standard Life, won't offer stakeholder pensions to a number of small companies, which effectively force them to break the law and risk a £50,000 fine.
The revelation appears to suggest several insurers are now refusing to offer stakeholder plans to companies that can not guarantee that a minimum number of workers will pay into them.
According to insurers, small schemes are not commercially viable, unless significant numbers of staff within a company actually pay into the scheme.
However, Terence O’Halloran, FSB pensions spokesman, told the paper: "Business are now being left in a ‘catch 22’ situation — compelled by law to have a scheme in place but unable to get one."
LEAVING THE world of pensions, the Scotsman reports the major increases in mortgage costs over the past two years might trigger a house price crash.
Latest research by the Centre for Economics and Business Research, which will be published later today, suggests the cost of supporting a mortgage on the average home is already taking more than 38% of households’ typical disposable income.
Furthermore, it forecasts the figure will breach 40% in 2004.
Douglas McWilliams, CEBR director, said that, when the figure has gone significantly above 50% in the past, "it has always fallen back".
He said: "If prices continue to rise for the next two years at around the current rate, a house price collapse will be unavoidable."IFAonline
Consultation closing 15 September
Across all public sector schemes
Proceeds being returned to investors