In the 1980s a large amount of personal pensions were sold to women. This allowed insurers to cut the value of their savings if they retired before their 65th birthday, even though retirement age for women is 60.



Most women have contracts obliging them to retire at 60. The insurers would have known this when they sold the policies and they would have also been aware that this would leave a gaping hole in their finances.

The insurance salesmen sold these old style pensions with longer term policies as this attracted the most commission.

They knowingly sold policies with a late retirement age knowing investors would have charges to pay if they retired earlier.

Danny Cox, from independent adviser Hargreaves Lansdown, says: 'Most pension policies from insurance companies such as Sun Life, Laurentian and London and Manchester were set up this way.'

One lady had almost 15 percent taken from her pension when she retired at 60. She had been saving with NPI for nearly 20 years.

She says: 'For almost two decades I have foolishly believed I was entitled to my full pension pot at age 60.'

From her 11,881 pound fund NPI took 1,735 pounds. This is a penalty known as market value adjustment (MVA). It left her with 10,292 pounds.

If she has a normal life expectancy this will have cost her 2,700 pounds over the rest of her life. Her potential pension income has been cut to 672 pounds from 768 pounds.

Her pension documents, signed in 1989, said she could retire at any time between the ages 50 and 75.

She presumed that if she retired at 60, she would not face charges.

However, there was a clause deep in the small print: 'If a member has not attained the age of 65 at the date of cancellation then the value of the plan can be determined by the actuary.'

This means that the insurer can decide what will be cut from the pension if the investor retires before 65.

This was not just a one off. This type of behaviour occurs all across the industry, according to Richard Jacobs, from financial adviser Richard Jacobs Pension and Trustee Services.

He says: 'This is an absolute disgrace. Salesmen earned more commission the later the stated retirement age written into the contract. So the last thing they wanted is for a woman to be able to retire penalty free at 60.'

A spokesman for NPI says: 'our personal pensions let you take your pension between age 50 and 75, but are written and costed until age 65. If you take benefits from a with profits plan before age 65, then an MVA might apply.'

The NPI with profits funds has performed terribly. 200 pounds a month investment for 20 years by a man retiring at 60 will have built up to 98,506 pounds, well below the average 112,942 pounds.

Its recent poor performance is because the fund only has around 10 per cent of its money invested in shares and the rest in fixed interest bonds.

Over the long term shares usually do better than fixed interest.