As previously announced at Budget 2013, the government will make single ex gratia payments of £5,000 to people who have with-profits annuities from the Equitable Life Assurance Society, and who lost money as a result of the maladministration of the scheme. 

To qualify, investors have to be aged 60 or more and their policies have to date back to before 1 September 1992.

The government will also compensate those investors who are in receipt of pension credit.

The Treasury said in a statement: “The legislation required to facilitate these payments has now been approved by Parliament.

“The government recognises that the pre-September 1992 Equitable Life with-profits annuities group consists of policyholders with a range of different circumstances.

“Therefore the government wants to focus the available funds on those policyholders who need it most. If someone is in receipt of Pension Credit they will have had their financial situation assessed, and will have a low income.

“However, the government will not pay out to estates left behind by deceased policyholders, unless they passed away after the announcement on 20 March 2013, it said.

This is “because these payments are intended to help relieve some of the pressures associated with living with a reduced annuity income” and “in order to maximise the payment available to living policyholders”, it said.

Annuitants, who took on their policy after the 1992 date, are eligible for compensation from the Equitable Life payments scheme (ELPS), which was recently extended to run until early 2015, alongside a national advertising campaign to encourage more investors to sign up to the scheme.

The National Audit Office highlighted in a report in April that the scheme was plagued by severe delays and errors and ran “the risk of failing to meet payment targets and overrunning on costs”.