Compensation pay-out won't be enough to save my house

Yet the blue and white For Sale sign in the garden of his suburban home signifies that life for the 71-year-old and his 67-year-old wife Margaret is not carefree, with golf club memberships and fancy holidays.

The Chapmans are just two of the million or so victims of the near-collapse of Equitable Life: the 250-year-old "could-never-lose" pension firm, which failed to live up to its monetary promises.

And they - like many, many others - are now being forced to sell the home they've lived in for 13 years in an attempt to have the kind of cash they thought they were saving through Equitable so they could enjoy their old age.

It's been a decade since the board of Equitable Life went to the High Court in London to ask for permission to stop paying out their "guaranteed" annuities to investors already drawing on their pensions. If they didn't, they said, the company would fail.

The High Court gave them a flat "no", and as a result Equitable closed to new business and slashed investors' pension pots by 16 per cent, before there was further, continued decline in their value.

It all sounds rather familiar now in the light of the recent banking crisis - financial high-fliers promising fictitious pots of gold at the end of the rainbow - but back then it was new territory for investors.

And so bad was the state of affairs at Equitable that the then Chancellor Gordon Brown appointed the Parliamentary Ombudsman Ann Abraham to investigate just what had happened.

Her four-year-long investigation was published two years ago and showed that maladministration had been ongoing since 1991 - and that Government bodies, such as the Audit Commission and the Financial Services Authority, were guilty of failing to regulated the company properly. As such, the Government was responsible for compensation to investors, somewhere in the region of 4bn-4.7bn.

Today, finally, Parliament debates how payments should be made - but not yet how much, as that will finally be announced in October.

Despite pledges from Tory and Lib Dem MPs before the election that Equitable Life pensioners would get full compensation, Cameron and Clegg now seem to be back-peddling. As a result there's a fear that only one tenth of the recommended compensation may be paid.

Of course by then the Chapmans will surely have moved house. "Mind you given the state of the housing market, and that we've only had one viewer so far, we might still be here," says Bill.

"Everything is relative and we're not living on the breadline, but it's only going to get harder - especially if we don't sell," says the retired IT consultant. "Of course it's about lifestyle choices, but then that's why we were saving for our retirement in the first place, because we wanted to keep the lifestyle we were used to.

"I was an IT sales manager for two international companies so I have some pension coming from them - as well as the state pension - but in 1986 I set up my own IT recruitment business and my wife was a partner so we knew we needed to provide for our own pensions.

"I looked at various firms and opted for Equitable. It had a guaranteed annuity and the dividends it was paying out were fantastic. And the company had such a heritage you thought it couldn't possibly go wrong.

"We were paying in an average of 12,000 a year for the two of us, although it fluctuated depending on how good business was that year. I was expecting to get about 20,000 a year when I retired, and Margaret another 5000 or so. Now we're getting less than half of that."

The first he realised there were problems was when Equitable Life went to the High Court in 2000. "There were other companies who offered guaranteed annuities, and some still do, the difference between them and Equitable was that they weren't paying out such huge dividends and were putting money into reserves in case of future problems, which is what Equitable should have done - and what the FSA should have been telling them to do.

"But I was stuck. I couldn't move the money because Equ itable also introduced tough penalties if you did - some people lost 20 per cent of their pensions by moving their money.

"So in 2003 I decided to retire, which meant that then I could move the money without being penalised. I finally moved it to Canada Life where I got a 7.1 per cent annunity - which is less than half what Equitable first promised, although more than if I'd stayed with them. But of course even that is just going down every year."

He adds: "Clearly the fault lies with Equitable's management and also the FSA and Audit office - the Ombudsman went into that and her conclusion was that we were due compensation.

"At first I didn't think we'd get any then after her report I thought we would. Even the European Parliament unanimously said we should be compensated. Obviously it's a hard time, and everyone's facing cuts. I think I expected a cut of ten per cent from the Ombudsman's suggestion - but not 90 per cent which is what the Government - and the Treasury civil servants - now seem to be suggesting."

Another who saw his pension disappear through Equitable's near-implosion is 69-year-old retired architect Donald Scott. He too went to the firm for pension investments when he started his own architect business in Edinburgh.

Now from his Craigmount home he runs the east of Scotland Equitable Members Action Group, to ensure the campaign for compensation keeps momentum.

"I joined in 1985 so I didn't spend my whole working life paying into their scheme, unlike some who are much worse off than me," he says. "I've lost around 12,000 per annum.

"When I retired and moved my money out of Equitable to Just Pensions, I got a better annuity. Equitable were offering me 1630 per annum, while Just are giving me 3091.

"It's galling that you work hard and think you're doing the right thing investing for your retirement with a reputable company and then this happens.

"I feel confident that I'll probably never get a penny, but there are many who lost much more than me, and compensation should be paid - the Ombudsman made that very clear.

"The government then asked Sir John Chadwick to look at how much and he came back with a recommendation of a tenth of what the Ombudsman suggested, and Ann Abraham has since declared that judgement as "unsafe and unsound."

"We are campaigning to make sure that every single MP knows that - and that we are not happy with Chadwick's recommendations."

Donald still hopes to supplement his pension with occasional work when the economy picks up, and his wife is still working he says to keep them going.

At the Chapmans though, working is not an option. Bill adds: "We're not in debt, we're getting by, but it's getting more and more difficult and there's a council tax rise on the way... but there are a lot of people worse off than us.

"I'm philosophical about selling the house. It's on the market for a fixed price of 540,000. We need somewhere smaller, but really it's to release capital so we can live how we had hoped to when we stopped working."

Ten counts of maladministration sees company funds plummet

EQUITABLE Life was one of the most highly respected pension providers in the UK - and one of the top performing - until the late 1990s. In 2000 the board went to the High Court to enable it to scrap its guaranteed annunity pledge for pensioners already drawing on their pension pots, but this was declined.

The company immediately halted new business and slashed every pension by 16 per cent.

An initial investigation into what had happened at Equitable Life put the blame squarely on the company management.

However the Parliamentary Ombudsman's inquiry revealed ten counts of maladministration by the FSA and Audit Commission - proving that the Government was liable for compensation.

The Labour Government then asked Sir John Chadwick to explore how much compensation should be paid. His answer of around 500ml has been declared "unsafe" by the Ombudsman.

There is now an independent commission being established to determine the final compensation to be paid.