Payouts for pension fund losers

Published on Tuesday 20 January 2009 20:56

STANDARD Life is to repay some investors who lost out when the value of its Pension Sterling fund plummeted.

The 2.4 billion fund is promoted as a safe haven for pension investors but its value has fallen by almost 5 per cent as a result of market volatility and exposure to mortgage-backed securities. The fall reduced the average holding by 900 to 18,200, but some investors lost tens of thousands with more than 100 million wiped off the total value of the fund.

Standard Life spokesman Paul Keeble told The Scotsman only those who carried out fund transactions between 23 December, when the problem surfaced, and 14 January, when it was reflected in the fund value, would be "remediated", or restored to their position before the transaction. Any fees incurred will also be rebated but no additional compensation will be offered.

But the group's stance has angered policyholders. One, also a Standard Life shareholder, who asked not to be named, said he was "staggered" that the fund continued investing in mortgage-backed securities, exposure to which has been at the root of widespread bank losses.

"Everyone knows you don't stay in mortgage-backed securities. It doesn't give you a lot of confidence in what Standard Life is doing," he said.

But while the fund was designed to be less volatile than equity-based funds, it was not a pure cash fund, said Keeble.

"The fund title suggests it is cash-based but it does invest in other instruments and the performance has reflected that."

Those instruments account for the majority of the fund, with just 12 per cent invested in deposit accounts.

The insurer said it would publish further details of its remediation plans later this week.