Campaigners met with education secretary Angela Constance on Monday to push for compensation for those abused earlier than 1964.
The Scottish Government plans to lift the three-year time bar which currently prevents survivors taking civil actions against their alleged abusers.
But the move would not apply to pre-1964 cases, meaning many older survivors would be unable to receive compensation or justice for what happened to them.
Following Monday’s meeting, the group In-Care Abuse Survivors (Incas) expressed disappointment at a Scottish Government offer to provide discretionary payments from a £13.5 million support fund, which is also funding a number of different initiatives.
Spokesman Alan Draper said the education secretary had “failed miserably” in her promise that pre-1964 survivors would be able to secure compensation equal to those able to take action through the courts.
He said: “After some ten months of deliberations, Ms Constance has come up with a support scheme which was described as discretionary, but she was not able to explain the criteria or how it would operate.
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“It’s a bit like a handout. Survivors feel like it’s going cap in hand for benefits. It’s an insult. It’s not acceptable to us at all.”
The chair of Scotland’s national child abuse inquiry, Susan O’Brien QC, will formally launch a call for evidence at a session in Glasgow tomorrow.
The inquiry was established on 1 October last year, but many survivors remain unhappy about its remit and the issue of compensation for older survivors.
A Scottish Government spokeswoman said: “We are considering how else to support survivors in ways that are practical, meaningful and fair, including what we will do to help and prioritise the needs of older survivors through the Survivor Support Fund.
“We are also looking at the discretionary payment funds which are available as part of the support fund and for this access to be as quick as possible.
“We want to break down barriers for survivors. That’s why we are introducing legislation to remove the legal time bar.
“We have recently announced the consortium which secured the tender to administer the £13.5 million In-Care Survivor Support Fund, which will provide additional support alongside the services we already provide.”