VICTORIA BISCHOFF: Shame on the greedy pension sharks who still refuse to play fair on annuities
What should you do with your money when you retire? It’s one of the most stressful personal finance quandaries we face.
And with a maze of options to navigate, financial advisers and pension providers play a crucial role in helping savers make the most of their hard-earned cash.
In truth, ordinary savers didn’t have a choice for years: they had to buy an annuity that would pay a guaranteed income for life.
The Prudential is now facing a shameful compensation bill totalling £250 million for its role in the rotten annuity mis-selling scandal
While this sounds simple, many retirees still heavily relied on experts for help in finding the best deal.
So it is an utter betrayal to discover that the very people you trusted to help you make the right decisions were actually more interested in lining their own pockets.
As we reported this week, the Prudential is now facing a shameful compensation bill totalling £250 million for its role in the rotten annuity mis-selling scandal.
Dodgy sales tactics saw hundreds of thousands of pensioners cheated out of a fair price for their life savings and locked into crippling deals until the day they died.
The regulator says the enormous bonuses and holiday prizes promised to sales staff at the Pru may have meant they ultimately put their own interests ahead of their loyal customers.
It is yet further evidence of how extravagant incentives only ever lead to a toxic sales culture.
And while the Pru is attempting to right its wrong, there are still savers stuck with a raw deal for life because the insurer has contract law on its side.
Rick Powell’s story highlights just how devastating this can be. Prudential admits that he would have been entitled to a better-paying retirement income had it known about his heart problems, but flatly refuses to pay him the rate he deserves because he has already signed over his pension pot.
In other words, the insurance giant is content to continue profiting from Rick’s ill health.
Prudential blames Rick’s adviser for failing to make it aware of his condition. But in the light of the insurer’s own appalling behaviour, you’d think chief executive Mike Wells, who made at least £7.4 million in 2018, would be a little keener to prove the firm can, on occasion, do the right the thing.
Given the £1.8 billion profit Prudential raked in last year after life expectancy stalled, it can certainly afford to.
While we’re on the topic of annuities, I know many readers are patiently awaiting an update on Money Mail’s Unlock Our Pensions campaign.
Five million pensioners are locked into annuity contracts that pay them paltry monthly sums of just a few pounds for life.
If they were instead allowed access to the whole pot — as over- 55s retiring today can — it could transform their lives.
Please know we haven’t forgotten you and are working behind the scenes to fight your cause.
Keep your letters coming and we should hopefully have some news soon.
It can be done
It is deeply disappointing to have now heard from two NatWest customers who were told they could not report a loved one’s death in a branch and had to go online instead.
NatWest has apologised profusely and promised to write to all staff to remind them that this is not the case.
Perhaps they could direct employees to its Beverley, East Yorkshire, branch for guidance.
Money Mail reader Mr Thomas was very impressed with the service he received after unexpectedly losing his wife, aged 82, in March.
He says: ‘I received a sympathetic private hearing from a member of staff and within a day or so both I, and my daughter, who is also an account holder, received a large box containing a truly exquisite floral arrangement. It also contained a message of condolence for our sad loss.
‘The bank’s bereavement team then guided us through the number of tasks that had to be completed. As a NatWest account holder of many years, I am so grateful for their help when I needed it.’
That is exactly the sort of service that customers of any bank should expect.