‘Vultures’ prey on elderly with gold-plated pensions

PENSION “vultures” are preying on the elderly with gold-plated retirement funds, MPS have warned.

The work and pensions select committee fears that a pensions mis-selling scandal is erupting as unscrupulous advisers are encouraging savers to transfer their money from guaranteed schemes into rip-off funds.

Research by the Financial Conduct Authority, which regulates pension advisers, shows that only half of such advice meets its standards.

More than 100,000 people a year are transferring money away from their defined benefit pensions after receiving advice.

Hundreds of workers from British Steel had been “shamelessly bamboozled” by advisers into transferring their gold-plated pensions into funds where they could face exit fees of up to 10 per cent, it said.

British Steel Pension Scheme members had, over the past year, “been exploited for cynical personal gain by dubious financial advisers in tandem with parasitical so-called ‘introducers’”, the committee said.

Steelworkers yet to reach pension age were encouraged to transfer their defined benefit pension rights into a defined contribution pension. But transferring away from a defined benefit pension or a “final salary” scheme was not usually in someone’s interests, the committee said, as it meant giving up generous and stable benefits in favour of a riskier investment.

Frank Field, chairman of the committee, said: “Once again, we find the pensions regulator fiddling while Rome burns, when it should have seen this rip-off coming.”