How typical savers are coping

By DAILY MAIL REPORTER
Updated:

 

MORE than £800billion of our money is tied up in the savings industry. But the Sandler review, published on Tuesday, says the financial services industry is plagued by high-charges, complex products, commission-tainted advice and bad management. Money Mail highlights the experiences of typical savers.

Shopping around

FOR most of their working life Derek and Sue Waymark, from Sherborne, Dorset, lived abroad. Now that Mr Waymark, 63, is semi-retired - Sue works part-time as a receptionist at a veterinary practice - the couple decided to go to an independent financial adviser to sort out their pensions and investments.

Derek says: 'Over my career I amassed nine different pensions and many investments. I had taken advice from tied financial advisers over the years but I thought the advice was bound to be biased.' He took a part-time course in understanding finance and decided he needed proper independent advice. He rejected local advisers because 'basically, they just seemed to be insurance salesmen who would just sell me endowment policies'.

On the recommendation of his accountant he opted for Bath-based adviser Chartwell. It has offered advice on his pensions - he is taking a phased drawdown from his policies - and has realigned his investment portfolio.

Part of their advice was to withdraw from Equitable's with-profits funds before the worst of the penalties were imposed.

Mr Waymark pays Chartwell on a fee basis and meets his personal adviser once a year - although he contacts them regularly by phone.

Bonus cut

CAROL MOUNTFORD'S plans for an extra retirement nest egg have been thrown into chaos thanks to the performance of the Britannic 12-year endowment.

Mrs Mountford, 60, from Hertfordshire has been paying £150 a month into the plan that is due to mature in January 2003.

The policy has earned around £10,500 in annual bonuses, but because of cutbacks, Mrs Mountford stands to receive a terminal bonus of just over £300, or £15 per £1,000 invested.

She chose the policy because Britannic was a household name that her family has had other products with in the past, so she trusted the firm with her money.

The scant terminal bonus is even more galling as Mrs Mountford says she has seen past performance figures that showed ten-year policies paying out £250 per £1,000 saved and 15-year plans that paid £850 per £1,000.

She says: 'It's not fair that insurers can sell policies on the basis of past terminal bonuses and then say they are not guaranteed.'

High charges

PAUL REED has lost just over £13,000 on a personal pension he had with insurer Abbey Life.

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He decided to move his £50,000 pot, now reduced to £37,000, to a rival insurer because the high charges with Abbey Life were eating into his pot and investment growth was far from impressive. Despite the penalty, Mr Reed (pictured with wife Toni and son Charlie) was advised by an independent adviser to move his money to Scottish Amicable and continue making monthly payments.

A self-employed photographer, he says: 'An adviser said it was better to move the money and make up the loss over the next 20 years rather than leave it idle in an Abbey Life fund.'

However, the Scottish Amicable pension still has higher charges compared with a maximum 1% chrging stakeholder pension. Mr Reed says: 'I have lost complete faith in pensions after what happened to me and I don't want other financial products.'

Safety first

RATHER than be at the mercy of the stock market, Esta Carpenter, 27, feels much safer having her money tied up in cash. Esta, an administrator, has a Cheltenham & Gloucester cash mini Isa and a savings account that tracks the Bank of England base rate.

The C&G Tracker guarantees to pay an interest rate no less than 0.25% below the base rate - it is currently paying out 3.85%.

Esta, from Winton in Bournemouth, took out the savings plans about a year ago and has pumped thousands of pounds into them during that time. She says: 'I feel much happier having my money invested in cash especially when the rate is guaranteed. 'My savings are important to me and help me fund one of my great loves - surfing.'

She adds that she has thought about stock market investments in the past but they are not right for her. 'Firstly, I don't want to take any risks with my money and secondly I think I'm better off with cash compared to riskier funds that invest in shares.'

The Equitable victims

THREE generations of the Fursland family have had their savings hit by the troubles affecting the firm in charge of them - insurer Equitable Life.

Ian, 37, had a with-profits pension worth £154,000 at the last valuation statement. But Equitable's penalties reduced this to £124,500 when he rescued the money to transfer it to Rothschilds.

He has also lost about £3,000 on the with-profits bonds bought for his three children, Oliver, nine, Anna, eight, and Eleanor, four.

These bonds too have now been transferred out, apart from Eleanor's which cannot be surrendered until it reaches its five-year anniversary next year. Ian's parents, Cledwyn and Ann, also took out pensions with Equitable Life, and lost about £52,000 when they transferred their money out last year.

The Furslands became involved with Equitable because a family friend worked for the firm.

Ian had seen past returns on Equitable investments which appeared steady and assumed he was getting reasonable investment advice.

Ian, who owns a lighting company in Weston, Hertfordshire, says: 'It's all hidden in the figures. It's only when you look at it afterwards you can see most of the growth is in the terminal bonus which is what they've taken away.'

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