‘Woodford had my pension – I can’t retire’

Retirement dreams ruined and life savings lost – that is the price hundreds of thousands of investors now face having to pay for placing their trust in Neil Woodford, once the most lauded stock picker in Britain.

Powerless to prevent what could be further losses, they are unable to sell out of their investments while a clean-up team steps in to dismantle the multi-billion-pound Woodford Investment Management empire.

There will be even more uncertainty and suffering to come, with two of the firm’s investment funds now in lockdown and no clear way out for the savers whose money remains trapped.

One – the Woodford Equity Income fund, initially suspended in June – is being wound down by an interim manager, following Mr Woodford’s sacking this week and the subsequent announcement that he was closing his business.

Another Woodford fund, Income Focus, is also now suspended, despite still charging investors thousands in fees. The fate of the fund is unclear as savers await a decision on whether it will be wound down or taken over by a new manager in the coming weeks.

The human toll of the unfolding saga is catastrophic. Virginia Jones, 65, put £48,000 of her self-invested pension into the Woodford Equity Income fund, but now says she will have to delay her retirement as the value of her savings has plummeted.

“This was a good chunk of my pension,” she said. “But now I don’t know if I will be able to retire before I drop down dead.

“In a way I am glad the fund is closing – at least it puts an end to the uncertainty and the fact that they have been taking God only knows how much in fees every day while our investments have lost money.”

One Telegraph Money reader from Cheltenham, who asked not to be named, has £700,000 tied up in

Woodford funds – roughly 70pc of his pension savings.

Around £620,000 of this is invested in the Equity Income fund, although he said he doubted whether his money would be returned.

He said he feared the market would take advantage of the distressed position of the fund, with buyers underpaying for its assets, and that investors would never get back the true value of their holdings.

Some of the assets of the Equity Income fund are particularly at risk of being sold cheaply. As many are unlisted, they are hard to sell and prices have to be negotiated individually. “My only concern now is to ensure that the shareholdings which represent my investment are carefully and responsibly managed, and that, as far as possible, the maximum value is preserved,” the reader said.

“The unlisted shares are more difficult to quantify and therefore more difficult to unload. I fear that we will now see a feeding frenzy on the Woodford carcass by the City vultures and hyenas, leaving only bones for the small shareholders to pick over.”

Kept in the dark over the risks and still paying fees as their savings shrink, furious savers tell Harry Brennan the true cost of the Woodford saga

Savers have lost around 15pc of their money since the Equity Income fund was suspended, as Mr Woodford attempted to rebuild the portfolio. Over the same period the FTSE All Share index has gained more than 2pc. The unluckiest investors may have already lost more than 40pc of their savings, with further pain possible.

Kara Gammell, 39, said it was “frustrating” to watch her pension savings diminish without the power to put the money to better use elsewhere.

She and the rest of the investors will have to wait until at least the end of January before they see a penny of their cash.

David Spencer said the saga had dragged out his grief over his father’s death. The suspension means he has not yet been able to wind up his late father’s affairs. “My father died in February but we were not given the formal permissions to sort out his legacy until July, leaving £5,000 tied up in the suspended Woodford fund,” he said.

“It is galling to watch this money shrink in value every day without the power to do anything about it.”

‘WHY WEREN’T WE WARNED?’

Others criticised Britain’s biggest broker, Hargreaves Lansdown – which heavily promoted the fund on its influential best buy list – as well as fund administrator Link, which was supposed to monitor management.

James Wadsworth, 77, from York, helped his daughter choose her investments in a self-invested pension with Hargreaves. He said the fund shop was “too close” to Mr Woodford. His daughter stopped adding to her £3,000 holding six months ago after Mr Wadsworth said he became “jittery”.

Chris Smith, another trapped investor, said his stake had plummeted by more than 27pc since 2017 and that he had lost faith in Hargreaves.

The broker waived its fees for the 300,000 customers with more than £1.6bn collectively locked in the fund, and recently scrapped its exit fees levied against investors looking to take their money elsewhere.

But Mr Smith said it was too little too late. “You can’t cure a loss of trust – platform usability and low fees aren’t any substitute for integrity,” he said.

Hargreaves said the regulator’s view of best buy lists was that “they improve outcomes for investors”.

Telegraph Money reader Will Ostrom said he was amazed it had taken so long for Link to fire Mr Woodford. oodford.

“As an investor in the fund und I am reconciled to a thumping great loss, but not the glacial progress s of Link in sacking a man so manifestly estly illequipped to manage other r people’s money,” he said.

“They must have known n 18 months ago that they needed ded to intervene. They didn’t and d now we are all losers thanks to his wayward ego and bad judgment.” Link nk said it had acted at the appropriate te time to protect the interests of all investors.

The spotlight has also turned urned on the regulator, the Financial al Conduct Authority (FCA), and its inaction action over the debacle.

This newspaper has previously viously disclosed how the City watchdog tchdog was aware of two instances s of rule breaking, where Mr Woodford dford breached the limits on unlisted isted stocks he could hold in the portfolio. olio.

It waited for more than a year before it made the information ation public, keeping hundreds of thousands sands of investors in the dark. These se breaches were the first signs of the troubles that eventually forced the fund’s d’s closure.

Former pensions minister ter Baroness Ros Altmann accused the FCA of being “asleep at the wheel”, ”, missing “clear warning signs” and for failing to intervene at the right time. e. The FCA is investigating both Mr Woodford odford and Link over the meltdown.

‘WE WANT OUR MONEY BACK’

YMr Woodford raked in an estimated £8.7m in fees from the Equity uity Income fund between its suspension on in June and his sacking this week.

With the Income Focus fund also suspended, investors are having to stump up a collective £2m m a month for funds they are unable to leave. eave.

Les Birch, 63, a pensioner er from north Wales, has £20,000 stuck in the Equity Income fund. She said Mr Woodford should repay the fees he had ad taken, something the manager has as repeatedly refused to do despite calls from MPs and others. “Mismanaging g the fund is one thing,” she said. “But keeping the fees while we have no choice ice of what to do with our money is just immoral. mmoral.

“He is a multi-millionaire re with more than enough to pay investors ors back out of his own pocket if he wanted nted to. For us, this is our life savings.”

Mr Woodford, the owner er of luxury homes and a stable of prized ed horses, paid himself more than £60m 60m in dividends from his soon to o be defunct investment business over the past five years.

‘You can’t cure a loss of trust – low fees aren’t any substitute for integrity’