Vampire fees suck £30m a year from pension prisoners

Thousands of pension investors trapped in suspended funds are having the life sucked from their remaining savings by fees of around £30m a year. Experts estimate that risky investments promising ng high returns would have attracted d 40,000 DIY investors, who backed ed them via selfinvested personal pensions ensions (Sipps) only for their nest eggs ggs to disappear when the schemes failed. ailed.

Pension firms charge rge around £700 a year to administer a Sipp invested in “non-standard investments”, tments”, such as overseas property and nd green energy schemes – far r more than fees applied ed to simpler, regulated funds. unds. But when the schemes es collapse, investors find nd they are stuck paying g for worthless assets.

GPC, a Sipp formerly rly known as Guardian Pension Consultants, , charged investors in “distressed” assets £400 a year on top of its standard £296 fee. This month it was declared insolvent by City watchdog the Financial Conduct Authority, after a deluge of complaints. s.

Andy, 51, and Michaela Oates, 52, are two of 1,600 investors rs who invested through gh GPC in Harlequin Property, an overseas s developer that took £300m of British investors’ pension funds before collapsing. They have been forced to pay fees for more

than six years since Harlequin ceased paying income or could be sold. GPC also increased its fees in that time.

Mr Oates: “They bled our accounts dry. They took the final couple of hundred pounds out last August so I have been expecting a threatening letter for the balance ever since.”

Esoteric investments often fail due to their risky nature coupled with the high commissions paid to salesmen. Critics have admonished Sipp firms for refusing to waive fees even as they fight off thousands of claims that they failed to conduct basic due diligence to warn investors.

Lifetime Sipp, another provider, has 2,000 “tainted” accounts in illiquid investments, costing investors £1.8m a year. At least 150 investors locked in Harlequin have received

fee demands from Hartley Pensions, which took over running the Sipps after Lifetime closed in April. It reinstated charges previously waived for stuck investors. Berkeley Burke, another Sipp, is embroiled in a court battle with one investor in a Cambodian “green oil” scheme and has around 200 claims filed against it at the Financial Ombudsman regarding storage “pods”, for which it charged investors an extra £220 a year on top of its normal no £280 fee. Investors have not received rec rental income from their pod for years despite paying Berkeley Burke Bu £100,000 in annual fees. Liberty Sipp, which was sold sol (excluding liabilities) to rival Embark Group last year, had 500 investors in unregulated schemes at the time of the th takeover. One of them, Ethical Forestry Ltd, is being probed by the Serious Fraud Office. Offic Liberty charged those investors annual fees f of £175, raking in about a £87,000 a year. There Th are 500 claims against agai it. A spokesman for Berkeley Burke said: “Our “duties as trustees are ongoing on regardless of any investor’s invest own decisions about ab their investments.” investmen An Embark spokesman said: sa “Where an investment investmen has legally lega failed it i can be closed, clo so these th charges cha fall away. Where Wh the investinve ment has not failed, fail the client has an ongoing ongoin pension scheme.” schem Hartley Hartle declined decl to comment. com

Lauren Davidson

Head of Personal Finance @laurendavidson

Sam Brodbeck

Personal Finance Editor @sambrodbeck

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