28 January 2009
Almost 100,000 investors with Standard Life have discovered
their pensions savings in a £2.4 billion 'safe' cash fund is
heavily invested in toxic mortgage debt. Savers were told the
Pension Sterling Fund was invested wholly in cash and that the fund
was ideal for those people approaching retirement wanting to
protect their savings from the market. But earlier this month
Standard Life said the fund had lost almost 5% of its value.
The losses are because just 30% of the fund is actually in cash.
Some 13% is in complicated investments, such as high-risk sub-prime
mortgages. In total nearly half the fund is invested in debts from
consumers and businesses.
Most savers assumed their money was in cash deposits and will
have had no indication their money was at risk.
A financial services lawyer says Standard Life's material about
its Pension Sterling Fund was "misleading." Adam Samuel, a lawyer
who advises companies on whether their product information conforms
to regulations, said Standard Life's documents failed the "clear,
fair and not misleading" test.
Although Standard Life has already said it will compensate
people who invested after it revalued the fund on the 23 December
2008, Mr Samuel said the documents show there is a case for taking
the compensation back much further.
Standard Life said the information was not misleading and in a
statement said:
"It has been detailed in our customer literature that the fund
was invested not only in deposits but also in a range of
short-dated money market instruments. As soon as sufficiently
reliable information was available, the securities held in the fund
were revalued. That led to a reduction in the unit price."
Standard Life would not comment on the suggestion that
compensation would be extended.
