I asked last week for experiences of pension mortgages and many of you wrote in. The stories are instructive in helping me to build up a picture – one that is already looking quite alarming.
As one reader ruefully noted after revealing a shockingly poor result of following expert advice: "There is a strong suspicion that all those involved in advising us – from the initial suggestion from our conveyancing solicitor, through the financial adviser whom he referred us to, and all the various people who we came into contact with – were all in it for the commissions that they could get."
My investigations are continuing and I'd be glad to hear from any more of you who took out a pension mortgage back in the last 1980s or early 1990s. If that is you, at the very least I urge you to check how it's doing.
Mike Williams, who first contacted me with his alarming tale – more of which in a future issue – believes it's a huge scandal. He could well be right. The more I look into the murky business, the more I agree with him that a lot of people may have been treated pretty shabbily.
The problem seems to be that pension mortgages were sold as an ideal solution. People were led to believe that their pension fund would grow considerably – in fact, that it would grow enough to allow their mortgage debt to be paid off and to leave them with a handsome pot from which to buy a decent retirement income.
But, of course, that wasn't the case for many. For one reader, the final amount after 25 years was less than a third of what he had originally been told.
Experts I've spoken to point out that you've got no case against a financial firm or adviser because of poor investment performance. But you have got a case against someone who misled you.
Mike Williams feels he was misled because his money was put into a much-higher-risk investment than he was happy with – which resulted in a much greater loss than he could have anticipated.
He worries that others could be in the same position or that they could simply have fallen victim to stock market fluctuations that have shrunk the eventual size of their fund, leaving them with a potentially disastrous shortfall when they come to use the pension to pay off their mortgage.
The main point is that anyone who took out a pension mortgage all those years ago, and hasn't checked how things have gone, could be sitting on a time bomb.
I'll be returning to this subject, but if you want to contact me in the meantime on the usual email, I'd be glad to hear from you.
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