Pensioners face Pibs quandary: settle for 40% or risk losing it all

More than 2,000 British pensioners this week face the tough decision on whether to give up nearly 60 per cent of their savings or risk losing it all.

The Bank of Ireland wants to get rid of permanent interest-bearing shares (Pibs), which pay out 13.375 per cent on the face value of their investment every year, as part of a major overhaul of the business.

The bank inherited the Pibs when it bought Bristol & West in 1997. People reaching retirement with relatively meagre savings typically bought the Pibs because of their high payouts.

Earlier this year, the bank told Pibs-holders that if they voted "No" to accepting 20p in the pound for their Pibs they would end up with just a penny for every £1,000.

Following a concerted campaign by the investors, led by Albert Kempster, a 73-year-old pensioner from Glasgow, the Bank of Ireland withdrew the offer.

And last month the bank, run by chief executive Richie Boucher, returned with a deal to give 40.2p in the pound.

Turning down the improved terms would not now guarantee that they would be forced to take 1p per £1,000.

However, the Irish government, which has a stake in the bank, would still have the option to force though that scheme or something similar.