Thousands of Standard Life customers have been told that their value of their pension fund has fallen by 5%.
Investors in the Pension Sterling Fund believed their money was invested in low risk cash based assets.
But in letters sent out this week the company has blamed poor performance of asset backed securities.
Did you have money invested in the Pension Sterling Fund?
Do you think investors were misled?
Perhaps you think it is just bad luck - and in the current climate investors should have expected possible losses.
Why not share your thoughts?
We asked for your comments, a selection of which are below. The debate is now closed.
MOST RECENT COMMENTS:
Thank you for including my interview about Standard Life's Sterling Fund on last Sunday's Money Box. What I think Standard Life and some other commentators are missing is the fact that having sold the sterling fund as a relatively safe haven, Standard Life went on to bring out another fund, the managed cash fund, which they now claim to be even safer. The point is, they didn't tell anyone and they didn't provide the opportunity to transfer funds into it. If they had, investors like me would not have lost money.
Geoff Barratt, Boscastle
I am absolutely devastated. I was made redundant this year and paid some of my redundancy package into the fund on the 16th December only to be told recently that it has now dropped 5%. The literature was completely misleading. I was under the belief that the fund was mainly cash and there was very little relief with returns of 3-4% depending on the interest of deposit... and I'm a lawyer!
I was under the belief that the fund was mainly cash
I have emailed Mr Gill today to complain at being misled into investing in the Pension Sterling Fund which in 2003 was described as a fund "invested in short term deposits managed actively in UK markets". Standard Life have in their wisdom chosen to jazz up the returns on this fund by investing in asset backed securities (which are definitely not cash)without informing policyholders. When will these idiots realise that they are not gambling with investment returns but with peoples lives and their wellbeing. Is it any wonder that the financial services industry is held in such contempt.
Michael J Green, Chipping Ongar, Essex, accountant for 40 years and former pension scheme trustee
I have had my accumulated pension funds in Standard Life's Stirling Fund for about eighteen months in preparation for retirement in three weeks time. This "safe" investment fund's growth "stalled" around September and I have been checking the unit value regularly since then and it has been fluctuating up and (mostly) down by fractions of a per cent. As this unit value is recalculated on a daily (as I understand it) basis, why should there be the need to devalue this unit price by 5% in one fell swoop?
Steven Lindley, Darwen
Thank you Money Box for raising this issue and I do hope that you will follow up on it. This is definitely a case of mis-selling. I first invested in this fund in 2002 with the specific intention of avoiding the volatility of the markets - all money markets, not just the stock market. Since then, I have put up with the vey low rates or interest paid out by this fund (about 3% annually as compared to the much higher rates that were being offered by building societies/banks throughout this whole period), because I believed that this was as secure as the documentation suggested. I was particularly disturbed by the tone adopted by Mr. John Gill in your programme. He made no attempt whatsoever to apologise for what had happened and I am left wondering whether this was, at best, a case of gross mismanagement of the money that many pensioners will be depending upon or, at worse, out and out corruption. If we allow those in charge of our financial institutions to escape the responsibility for their actions when such cases occur, how can we ensure that a similar scenario will not occur in the future?
How can we ensure that a similar scenario will not occur in the future?
How can we have faith in banks and insurance companies. I was misled that this fund was low risk and I have lost quite a lot of money. We should have compensation.
Michael Mansi, Hitchin
Having suffered at the inept hands of Equitable Life I moved what remained of my pension fund to Standard Life some years ago and more recently looking for a safe haven against market volatility, moved into the Pension Sterling Fund. Very astute investment strategy eh! It's enough to make you become a little cynical!
It's enough to make you become a little cynical!
Stuart Vinter, Croydon
As one of the 96,000 people with money invested in this fund I consider that I was misled by the Standard Life Key Features documentation. According to Standard Life, this fund is level 1 on a volatility scale of 1 to 7 where 1 is the lowest level of volatility and 7 is the highest. How can a fund with a volatility level of 1 possibly drop by 5% overnight? I have submitted a formal complaint to Standard Life and strongly recommend that the other 95,999 people affected do the same!
I have lost circa £5,000 as a result of this revaluation. I think Standard Life has not been prudent or honest in its handling of this situation. How long has the fund manager been investing in Asset (mortgage) backed securities and are there further write downs on the horizon? The mark to market model of valuation has been disregarded. This model would have revealed the poor risk management earlier and funds could have transferred to another provider. I suggest complaining and writing to the Financial Ombudsman and your M.P.
Ketan Patel, Bedfordshire
I am about to retire so had my Standard Life pension all in their "Sterling" cash fund, so I've lost over £7,000. According to their own figures, this fund has lost 4.5% in the last 12 months compared to the sector average of plus 3.9%, which is a dreadful performance for a "cash" fund. I trust the fund manager will be looking for another job soon.
John Clark, Wirral
I feel completely misled. I asked for my pension to be transferred into this fund in July 2008 as I had asked to be taken out of the stock market and into cash. I was told by my financial adviser of the low return but saw it as a safe haven on a short term basis until markets started to recover. I would not have exposed myself to asset backed securities. I would not have invested in these when the market was stable. There is an interesting comparison between the fate of those chasing high interest rates being recompensed in full, presumably including higher interest as a risk premium, and this fund which I was informed by my financial adviser was "paying around 3.7%" and was (I thought) the lowest risk fund available for my pension fund if staying with Standard Life. Is there going to be any regulatory action on this in respect of TCF (treating customers fairly)?
John Owens, London
How can Standard Life offer a fund where half the assets are based on funds of dodgy mortgages - the very thing that has caused the crisis - and claim it is suitable for holding assets while other investments are uncertain? In all old literature - now withdrawn and replaced swiftly with new weasel words, they called the assets cash investments. They told clients their Asset Backed securities were of the highest quality - all AAA. What market event caused the fund to crash 14 Jan? None, nobody else has been affected. That is just the day Standard Life realised they had mismanaged the fund, lost £130,000,000 and dumped it on unsuspecting customers. Where are the regulators?
Another example of a supposed "cash" fund not being what it seems. This was their lowest risk fund and most investors would have assumed that the investments were in conventional short term government or bank deposits or even short dated gilts. Income was not the priority, it was capital protection. This has badly dented Standard Life's reputation and if they are not prepared to stand behind this vehicle it will speak volumes about how much they care for their pension fund investors. I will certainly treat anything they say now with considerable caution.
Stuart Fraser, London
I'm in the same position as David Wells - two years from retirement I acted to protect myself from volatility - and used the Sterling fund as a safe haven. The Standard Life graphic showed that the benchmark index was cash - the Standard Life fund shadowed this closely. I invested on this basis that the fund shadowed this non volatile index. A complete misrepresentation, it turns out, and Standard Life is decoupled from its stated benchmark by a huge margin. If, for example an index tracking didn't track the market - the FSA would crawl all over it. Same applies here. I'll be going to the FSA on the basis of misrepresentation.
Investing in a true cash fund would have protected the capital value of your contributor's pension pot and hence meant no drop in his tax free cash sum. However, at least 75% of pension pots are normally used to purchase pensions using annuity rates, which are only rarely guaranteed in advance. The strategy of using a cash fund gives no protection against annuity rates worsening. Significant protection can be given by using annuity protection funds and this much misunderstood area would be an excellent subject for a future edition of Money Box.
Chris Grey, Guildford
I am 64. I made it clear that I wanted my SIPP in a place where the capital would remain intact, rejecting several recommendations to widen my portfolio. I was recommended the Pension Sterling Fund as a cash fund (I now wonder what that may mean, as in your second interview it would appear that a cash fund, and investment in the money markets, may or may not be the same thing), as a safe place for my pension fund. Worried about the financial turmoil of recent months I asked for confirmation of the safety of my capital in Sep 2008 and was assured that the two funds with Standard Life are held in cash, and therefore not exposed to the equity market falls. Is that response technically correct while omitting the fact it that this "cash" was still exposed to market fluctuations and could fall? I do feel that I have been badly misled. Furthermore it would appear that "reduced by approximately 5%", can be stretched to almost 7% by the use of the word "approximately". Will we ever have an independent FSA that ensures that the companies in the Financial Services industry, some of them household names, do not mislead, do not bury the important facts in a myriad of clauses and perhaps tell the whole truth to those people who have entrusted their savings to them.
Nigel Partridge, Barnstaple
The Sterling One fund was until very recently the only cash fund available to Standard Life pension fund members. It was marketed as a short term safe place to hold funds and return on funds was not a factor. It was recommended that exposure to this fund should be increased as retirement date neared. Standard Life appears to have chosen to take out higher risk investments in this fund than would have been expected by pension holders, and thus misled them. No listing of the major specific investments of the fund have been made readily available.
C Jennings, Cambourne
Yes definitely misled. At the end of 2007 I had my stakeholder pension pot divided into thirds, UK Equities, European and managed. I phoned Standard Life and said I wanted to move the fund into a cash fund so there was no risk. I asked what the possible returns were and they said 3/4%. I said OK I'll accept that, my main concern is that I don't lose what I have. The guy I spoke to said put into the Sterling fund. I had no reason to question further because the guy said there was no risk to my pension pot. The change was made and twelve months later I find out that the this innocuous fund was made of of asset backed securities, the most toxic of all investments. Gobsmacked. I thought my fund was safe but they had put me into something that was very very unsafe and it's coming out on Monday.
David Wells, Middle Rasen
Standard Life literature indicates that this is a safe haven for cash in uncertain times. This is their lowest risk fund. Heaven help anyone in their higher risk funds.
Ron Brown, Stockton on Tees
I've heard numerous times on your programme that there are "cash funds" out there but no-one ever gives a true example. I do not believe that there is a fund which pays "interest" as we all understand it. What we, who have been burnt, would have liked over the last 10 or so years is interest. But it's now too late for that.
Alison Wright, Salisbury
The comments we publish are not necessarily the views of the BBC but will reflect the balance of views we have received. It is helpful if contributors state if they work for any organisation relevant to an issue discussed. Readers should form their own views on whether messages published represent undeclared interests, or views prompted by a common source.