Equitable fowl

Like many people, James Stuart McIndo, a prize winning wildfowl carver, had been looking forward to a comfortable retirement after a career in the shipping business.

But his decision to invest in Equitable Life has resulted in a financial disaster.

He put his pension savings into a retirement income policy, called a with-profits annuity, and this depended on Equitable Life staying financially healthy.

Of course it didn't, and now James has been left to pick up the pieces: "It was just a big shock."

"This has made me really recalibrate my life and...I'm going to sell my house. Basically, my house is my reserve," he says.

Trouble

Not everyone who invested in Equitable Life are in as much trouble - some have been able to take their money out at a loss, and then invest it elsewhere in the hope that it will grow again.

People who have taken their pension and bought a conventional annuity (an income for life, usually paid monthly) aren't affected.

Again, it is the many thousands who chose the with-profits annuity option that are in trouble.

Retirement years are marred

They chose with-profits because it was sold to them on the basis that linking to the investment benefits of Equitable Life would give them benefits throughout their retirement too.

Cuts

But "benefits" is not how pensioners like James would describe what they've received, and we've been hearing from many Working Lunch viewers in the same position.

Jim Ager says: "All the other policy holders, if they wish, can take a penalty on their funds, withdraw them and put them with another pension provider with the hope of getting better results.

"But with-profits annuitants are locked there to the bitter end, and at the moment, it looks like the end is going to be very bitter indeed," he says.

James' Equitable pension was paying him £13,000 a year in 2000; a year later that was cut by £300, then by £400, and then last year by £3,300.

This year he's expecting a £1,000 cut, leaving him with just £7,900 a year before tax.

Too little too late?

James calls it a shambles, and claims he and thousands of others have been let down by mismanagement and neglect by the government regulators who were supposed to keep an eye on Equitable.

Lord Penrose, a judge, has compiled a report for the government on the Equitable affair and this is about to be released.

It has been sent to the Serious Fraud Office, which might seem like good news for campaigners, but in reality, they're doubtful it'll be much help for with-profits annuitants.

Liz Kwantes, from Equitable Life Members' Help Group says: "They can't actually get out of the fund at all, so they're trapped in Equitable and they've got a problem and there's nothing they can do but have sleepless nights."

On the referral to the SFO, she adds: "There's a body of opinion who think this may be a way of slowing it down, so the treasury don't have to pay government compensation.

"Apparently a lot has been said about the government actuary department in the report and so that may not be seen for a while - this could take up to five years...if the Serious Fraud Office decide to make enquiries about it."

James has his own take on the latest news: "Personally, I think if anything does happen, pensioners like myself, at my age, are not going to live long enough to see any benefit to bring back the pension to what it was supposed to be."