Case Study: John Telfer, 69, retired engineer

'It is unbelievable to have been robbed by an utterly respectable organisation'

John Telfer, a trained engineer, spent much of his career travelling the world advising on the best way to manage ports and harbours. But when it came to planning his retirement he claims he got the hard-sell treatment from the local branch of Equitable. He invested £200,000, but has lost up to £65,000 of that.

"I assumed that they were concerned with their reputation," said Mr Telfer, 69, who lives in Windsor, Berkshire, with his wife, Jane, 59. "But the Penrose report shows that we and all the other policyholders were cheated out of our savings."

He put his money into a with-profits pension that would allow him to draw down up to 5 per cent a year. It had inheritance tax advantages, and Mrs Telfer would be able to continue benefiting after her husband died.

Although the policy operated normally for a few years, the alarm bells rang after the House of Lords's decision. Mr Telfer eventually pulled out two years ago, at the time of the second special arrangement allowing policyholders to quit in return for paying a penalty.

"I worked for 48 years," he said, "and it is unbelievable to have been robbed by an organisation that was on paper utterly respectable."

Mr Telfer believes that the Government is doing all it can to avoid paying compensation, knowing that few Equitable pensioners can contemplate the costs of a lengthy court action on top of the losses they have suffered.

He said: "Penrose is absolutely right to lay the blame primarily at the door of the Equitable directors: they, after all, created the situation which we are now in. We are all losers, and some are less well placed than I am to cope with the future.

"But Gordon Brown is hardly sympathetic. He is using Penrose to say that the Treasury are not really responsible and therefore don't have to pay. But the loss of faith in pensions now is very, very serious.

"The Government is supposed to be engendering trust in pensions, but they seem to be doing the opposite."

Mr Telfer says that Equitable's Windsor office sales team was given a set script with which to sell policies, without being given the full picture.

Once the truth came out, the man who had sold Mr Telfer his policy phoned to apologise, claiming to be as shocked as anyone else. But, as Mr Telfer ruefully pointed out, that is small comfort as he surveys the ruins of what is left of his life savings.