In our Pension Diaries series, we speak to people of all ages in the UK to find out how much or how little they have saved for retirement and the realities of putting money aside for your future.
This week, we speak to Tricia Reilly, 76, who lives in Warrington, Cheshire, alone. She is renting a two-bedroom house after being forced to give up her home as she could not afford the mortgage.
Tricia, who is a mother of two and has three grandchildren, says despite paying into pensions all her life, she now survives on the state pension and a small private pension.
What career were you in and did you save into a pension?
I got a job in a bank and got married at 19. I had my first son in 1970 and then my second in 1973. By this time, I realised my marriage was a sham and got divorced. So I was a single mum from when my sons were aged three and six months old.
I was lucky as I had my parents on hand to help. My aunt worked at the tax office for HMRC and got me a temporary job there. I quite liked it, so I stayed and got various promotions. But in the late 1980s, things were changing in the civil service. I wasn’t as happy and felt I wasn’t being stretched.
I joined a life assurance and pension company, which ended up being a huge mistake and led to me losing my civil service pension, which I had paid into for 16 years.
I left that role and began troubleshooting for various small accountancy practices on an ad-hoc basis. I then worked as a tax practitioner before joining a Warrington accountancy practice as a tax manager, working there from 1995 to 2006. In 2008, I was made redundant before working for one more firm.
I haven’t worked since I was 62, even after applying for around three jobs a day without success. I was either too qualified or too old for the roles.
What went wrong with your civil service pension?
I was convinced to join a financial company which did life insurance and pensions in a role known as a financial advisor, selling pensions to people. I was self-employed, and they paid you based on how many commissions you got.
It sounded good at the time when I was doing the interviews. Then they sent me on a training course and alarm bells started ringing. Through working for the revenue in the civil service for 16 years, I knew a fair bit about tax and pensions. But I realised a lot of the people working for this firm were just salespeople.
I distinctly remember going to see a nurse and she told me one of the advisors had told her to come out of her NHS pension and have a private pension instead. I told her she mustn’t do that, as the NHS pension was one of the best there is, but she could have a private pension alongside that.
I realised I couldn’t knowingly sell what I felt to be inappropriate products and I didn’t feel comfortable giving that advice. I didn’t do very well at selling, and the commission dried up.
Some of the older and more established financial advisors asked me to do some tax planning for them, so I would go along with them and be a tax advisor and planner and they would share their commission with me.
Tricia deeply regrets transferring her civil service pension
The manager asked me if I had a pension of my own, which I could transfer to them, and so I would get the commission for that [as it brought in a chunk of money to the company]. I fought it for a while, but in the end, I commuted my civil service pension into a private pension. I knew it was wrong, but I felt I had no choice and it gave me a chunk of commission to live on.
Then, when the financial crisis happened in 2007, people’s pensions were wiped out. When a pot crashes, if you leave it, it will recover. But after being made redundant and being out of work at 62, I needed an income and panicked.
I had around £125,000 when the crash happened but it lost most of its value. I ended up taking what was left of it to live off and I drew down from it so it didn’t have time to rebuild.
How did you lose your house?
I used to have a nice four-bedroom house, but after my eldest son bought a flat and the other moved abroad, I downsized and bought a two-bed flat in a converted warehouse in 1999.
I started getting my state pension at 60, and after being made redundant, that, along with a very small private pension, was my only income, and I couldn’t afford the mortgage. At first, I moved out of my house and rented it out while I rented a flat. But I couldn’t cover all the bills, so in the end, I gave the keys back.
I had got an interest-only mortgage linked to my pension and the 25 per cent tax-free lump sum of my pension was supposed to pay off my mortgage. It had been in line to do that, but then my pension was wiped out.
What is your pension situation now?
I receive a state pension of £274.69 a week and also get a tiny additional payment to that through the SERPS scheme, which is about £76 a month. I then get a small private pension of £158 a month from the accountancy firm where I worked until 62 and where I transferred what remained of my pension to.
I am just over the threshold to receive pension credit.
I now rent a one-bedroom house and pay £850. I get housing benefit of £49 a week and my total income, including that and my pensions, is £1,600 a month. But my outgoings are £1,800 a month, so there is a £200 deficit. My outgoings include my rent, energy bills, council tax, telephone, TV licence, insurance and food and things like the dentist and opticians.
As a result, I have to dip into my savings each month. When I got my pension, I had a bit of a lump sum, which paid off credit card bills and debt. I had £10,000 of savings in the bank and that is now down to £3,000. I now only have enough savings to cover 12 to 18 months of the deficit and I live in fear.
What is your biggest pension regret?
My biggest regret is getting rid of the civil service pension and transferring it into a private pension. I knew it was wrong, but what was the choice: to leave it where it was or feed my kids? The manager who advised me to do it was wrong. If he had been a genuine person, he would have told me I should never do that. I feel I was robbed of my civil service pension. If I still had that, my life would be comfortable.
I wrote to all these places about mis-sold pensions, complaining, but they said that as I had effectively sold my pension to myself, it was my own fault.
Is retirement very different from what you envisaged?
I never thought that at the age of 76, I would have lost everything from my pension to the crash to my home after being made redundant.
I live very frugally and in fear of not being able to manage. I am lucky as friends and family are very good and buy me things I need at birthdays and Christmas.
I worked hard all my life and never thought I would end up like this. I wanted to travel in retirement and see the world. But my life is about survival instead of enjoying retirement.
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