The Great Savings and Pensions Scam. An A-Z Guide. Today M-N

M – Mis-selling. The financial services industry has a long and shameful history of selling us products which have made insiders rich but impoverished ordinary people. We lost over £15bn in the 1980s pensions scandal. Another £40bn evaporated when endowment mortgages failed to give the expected returns. At least £5bn of savers’ money was looted in the 1990s ‘precipice bonds’ disaster. Since 2000, more than £10bn has been pocketed by the main banks in supposedly ‘guaranteed’ stock-market investments. Billions more were stolen through mis-sold PPI policies (Payment Protection Insurance). More recently hundreds of thousands of us are getting caught by the ‘switch and get rich’ scam. With this one, financial advisers and pension salespeople convince us to switch our money from older, often expensive and/or poorly performing pension funds to newer or cheaper ones. When we switch, we pay huge commissions. A study of hundreds of people who switched couldn’t find a single case where the switch was in the saver’s interests. We switch, advisers and salespeople get rich. As for those who have already retired and bought an annuity, well they are losing about £8m a day (£2bn a year) because they were sold the wrong products. I believe that there are a few mis-selling scandals going on right now. Banks are still raking in billions from things like ‘Growth Bonds’ and ‘Guaranteed Bonds’ which are only guaranteed to give growth for the banks, not savers. I think ETFs (Exchange Traded Funds) are a disaster in the making. Please contact me if you want to find out why. And, of course, there is the government’s NEST scheme….

N – Nest (National Employment Savings Trust). This is likely to be a massive savings scandal and may well result in a huge legal action against the government for mis-selling. About twenty million people, who currently don’t save for a pension, will be automatically enrolled in a pension savings scheme. Employees can opt out if they can manage to find and complete the correct paperwork. At least £10bn a year will be taken from often lower-paid workers and will be handed over to the companies running this scheme. For reasons the government has so far failed to explain, the fees being charged by British pension companies to run the scheme will be three to five times higher than the fees for similar schemes in other countries. With the high fees the companies will take and the low growth they are likely to achieve, when many of these NEST savers retire, they will be lucky to even get back what they put in. But the pension companies will make a fortune.