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One pensioners story of lost savings, poor returns and deaf Government Ministers
We are always pleased to hear from pensioners and savers who want to share their views and experiences.
When we write about savings, it is usually about the way that savers as a whole are treated. But each saver has his or her own story, which is often vital to their growing problems in funding their retirement. Sometime it is only by looking at particular stories that the magnitude of what is happening is brought home. We are grateful to BW, an SOS member, who sent us the letter reproduced below, who is willing to share his tale, which brings home just what a shambles savings policy in the UK really is.
Dear Save Our Savers
Pensions are a form of saving and successive Governments have encouraged us to save. It wasn’t the savers that caused the banking crisis and recession; it was greedy borrowers, bankers and the FSA. But it is the Savers that are being penalised to fund the bailout for all those who got us into this situation in the first place. That cannot be right. I have used my own case as an example.
I was unfortunate enough to lose my job at the age of 63. So I accepted that there was no way I was going to get another job and fell back on a relatively small private pension that was paid to me from age 60. I had savings in an ISA so I invested them in bank shares on the grounds that banks would be safe and while shares can go up or down it would be unlikely all the banks would go bankrupt. I had various bits of pension and AVCs from previous short term employments from way back. So I thought well that does not look so bad.
Let down by the banks
Then Northern Rock failed and a run on the Bank finished it off although Mr Applegarth (not a qualified Banker) was able step aside with a cool £760,000 in his pocket. Mr. Brown took charge and said no Investors would lose a penny as a result of his timely intervention! He forgot to mention the thousands of small investors who had shares in the Bank lost everything as he confiscated the shares. I was quite a few thousand pounds down and things did not look quite so rosy. But worse was to come.
RBS failed dramatically and it was in fact worse off than Northern Rock but Mr. Brown could not allow a second Bank to fail as this would be seen as shear carelessness and it would bring the Country down. Publicly he propped RBS up and also shuffled a massive clandestine loan their way being careful not to tell anyone what he had done. Fortunately I did not have many shares in RBS but – I still have them unlike Northern Rock. However they are only worth a fraction of what I paid for them and any dividends are worthless. A similar situation developed with TSB and HBOS.
Trying to get a decent pension
Things were not going my way so I thought I would put the bits of Pension on the Open Market and see what I could get for them in the way of an annuity compared with the rates offered by the holders of the funds. Yes I could get more by going open market but less than in previous years. My remaining savings were going down I needed the annuities so had to accept the reduced rate.
Now I hope you followed the above because I thought long and hard about it and I dare say lots of other people were in similar positions. There were a lot of us born just after the Second World War and who are now retiring only to find the financial climate acting against us in low annuity Rates. Our savings are attracting interest rates less than the inflation rate, through absolutely NO FAULT of ours.
In my age group we suffered austerity after the Second World War as children so a lot of us have made provisions for our retirement only to find that as we reach retirement age it is all taken away from us. A point I tried to make to my MP is that the shortfall of pensions and savings means that actual savings capital is being spent and the derived income from interest is lost forever. This means that the present financial situation affects pensioners and their savings not just during the period of recession but for the rest of their lives. The real nasty thing about this recession is it adversely affects all those people, who the PM advocates as, ‘HAVING DONE ALL THE RIGHT THINGS’. Meanwhile the Government rewards all the borrowers who were partly to blame for the recession with low interest rates.
Successive Governments have over the years allowed the basic State Pension to lapse to a figure that is not survivable on, which means that without a top up you cannot survive. So the Government saves trillions of pounds by not paying those that paid into private pensions or were self employed a proper ‘survivable on’ Pension.
Those that did not pay into a private pension or have savings are means tested and given pension credits to make their pension up to the amount deemed ‘survivable on’. But it doesn’t end there because pension credit’s opens a gateway for all manner of other benefits that the private pensioner does not get.
It is wrong that the State should pay you a reduced rate of State Pension for ‘Doing all the right things’. This matter can be addressed by reducing income tax for the Private Pensioners and Savers. While the present punitive financial arrangements exist, private pensioners and savers will suffer losses which in turn will affect their income and standard of living for the rest of their lives.
Response from Government Ministers
During the last three years I have letters from various Government Departments either addressed to me or to my MP. The letters never address the points raised. While my MP tries her best clearly nothing is getting through to the Government Ministers. I have written to the PM but he has instructed his secretaries to just send letters on to his Ministers who then prevaricate on irrelevant subjects. Mr. Cameron says he listens to what people have to say!! If that is the case he is in definite need of medical attention because he will not listen to me. He listens to school children because there is promotional publicity for him but refuses to listen to some old decrepit pensioner who has ‘Done all the Right Things’. When I complained about low Annuity rates caused by the recession a letter from Sarah McCarthy-Fry MP on behalf of the Treasury and dated 9th July 2009 to my MP says;
‘I would also like to take this opportunity to make your constituent aware of the open market option – his right to shop around, when he decides to take an income from his Pension savings, to select an annuity provider. By using this option some people are able to increase their pension income by up to 20%’.
Similar rhetoric is used by Mark Hoban in answer to two Written Parliamentary Questions submitted by my MP on 15th December 2011.
Clearly neither of them gets it! It is like they are saying the Open market option for annuities did not exist before the recession but you can now make good your losses by going ‘Open Market’ to make up for the lower Annuity rates!!! What a load of ——.
Anyway I hope that most of my letter makes reasonable sense and helps with ‘Save our Savers’. Regrettably I have not got the time to answer any incoming letters on the subject unless of course they are from the Prime Minister and that does seem highly unlikely.
All the Best