When Shirley Pressler took her annuity in 2012, it was under the most difficult of circumstances.
She desperately needed money to pay for the funeral of her son, Graham, who had died suddenly aged just 35 after suffering an epileptic seizure.
Shirley had already drained her savings and borrowed on a credit card to help cover the cost of the ceremony — but it wasn’t enough.
Desperate to give her son the funeral he deserved, she arranged to dip into her private pension fund and withdraw £2,485.
Tragedy: Shirley Pressler with her son, Graham, who died suddenly aged just 35 after suffering an epileptic seizure
It wasn’t until later that Shirley, from Blackburn, Lancs, realised the consequences of this decision.
Under strict rules in force at the time, savers who took a tax-free lump sum from their pension had to then use the rest of the fund to buy an annuity — or income for life — whether they wanted one or not.
It meant that Shirley had unwittingly committed herself to receiving a pension of just £10 a month until she died.
Even more frustratingly, had she been able to avoid taking the money for just another two years she would have benefited from new freedoms that allow savers to take all of their pension in cash.
And Shirley is not alone in her plight. She is one of five million savers stuck with pitiful annuities that pay just a few pounds a month.
Like Shirley, many of them were forced to take their pensions earlier than planned.
In 2014, the then Chancellor of the Exchequer, George Osborne, promised a lifeline to these savers and said they would be able to exchange their payouts for a cash lump sum.
But in October 2016 — months before the plans were due to come into force — the Government did a U-turn.
Now Money Mail is calling on ministers and pension companies to work together to allow savers to cash in pension pots where it is clearly in their interest to do so.
Desperate measure: To give her son the funeral he deserved, Shirley arranged to dip into her private pension fund and withdraw £2,485
Our Unlock Our Pensions campaign has highlighted heart-breaking stories from savers who had hoped to be allowed to take their pension cash after George Osborne’s announcement in 2014.
Last week we revealed how customers trapped with tiny annuities had been left struggling to pay vital bills.
Usually, savers can take out a maximum of 25 per cent tax free from their fund.
However, Shirley was among an estimated 275,000 savers whose pensions contain small print that allows them to take more.
So after taking £2,485, this left her with a pension pot of just £3,258. Shirley, then aged 57, was also relatively young to be receiving a pension and so received payouts of just £10 a month.
Insurers reserve their highest payments for people they believe will not live for very long.
The payments are so small that Shirley must wait another 22 years before she breaks even.
When she dies, any remainder of her fund will be taken by Legal & General, the insurance giant that offered her the annuity.
Six years after taking the annuity, Shirley, now 63, would love to have access to the remaining £3,258 of her pension fund.
After Graham’s death, the divorcee found it too difficult to continue in her job as a psychology lecturer. She hoped to find another job, but had to abandon her plans after being diagnosed with breast cancer.
Although she has a modest pension from her teaching days, money is tight and she has no buffer against unexpected bills.
Shirley has also been hit by the hike in state pension age for women, which has meant she’s had to wait an extra six years for her payout.
Fight: Shirley is one of five million savers stuck with pitiful annuities that pay just a few pounds a month
She says: ‘The £10 a month I receive from Legal & General just goes into my bank account and gets eaten up by bills. Having a few thousand pounds of savings behind me instead would make such a difference.
‘There must be hundreds of thousands of people in a similar position who’ve had to take money from their pension fund when their finances became tight and are then stuck with annuities that are worth pennies.
‘It’s wrong to condemn them to receiving a tiny pension when, if they retired a few years later, they could receive their money in full. The rules seems to be designed to benefit the financial services industry, not ordinary people.’
Campaigner and former pensions minister Baroness Ros Altmann says: ‘Cases such as Shirley’s highlight how the decision to stop people cashing in their annuities was heartless.
‘People were promised they could receive a lump sum that they could use to transform their lives. At the last moment that hope was snatched away.’
One insurer, Phoenix Life, has allowed savers to take small annuities of under £10,000 in cash.
But others — including Shirley’s insurer, Legal & General — have steadfastly refused.
In a House of Commons debate in the aftermath of the decision in 2016, Simon Kirby, the then Economic Secretary to the Treasury, promised to help savers caught in the annuities trap.
But two years later, still nothing has been done.
A Legal & General spokesman says: ‘We are sad to learn about the difficult circumstances this customer is facing.
‘In this instance, the existing legislation does not override the terms and conditions of annuity policies that typically state an annuity cannot be cashed in once it has been set up.
‘We are therefore unable to offer the customer the option to cash in their existing annuity.’