The thousands of teachers making additional voluntary pension contributions to a scheme run by the Prudential are being told not to worry about reports that a Pru pension plan came out worst in a recent survey.
The survey, by Planned Savings magazine, looked at regular-premium with-profits pensions over 35 years. Companies were asked to make projections on a non-commission basis for contributions of Pounds 100 a month, assuming consistent nine per cent growth.
The top-performing company was Scottish Equitable, with a maturity value of Pounds 247,426 and total charges of just Pounds 23,880. Bottom was Prudential Financial Services, with a maturity value of Pounds 186,033 and charges of Pounds 85,273.
The “official” additional voluntary contribution (AVC) scheme for members of the Teachers’ Superannuation Scheme is run by the Pru, which has more than 90,000 teacher-members. However, independent pensions specialists said last week that studies show the Prudential’s AVC scheme to be one of the best-performing on offer.
Barry Fawcett, assistant general secretary at the National Union of Teachers, said: “We have no problem about recommending the Prudential AVC. It’s a different product from the regular-premium pension. It’s been consistently at the top of the table for AVCs and we’ve had a report from the Government Auditor’s department rating its performance.”
Bacon and Woodrow, an accountancy firm which conducts regular surveys of the returns on pensions, said that over 10 years the Prudential AVC was the second-best performing it could find. “Performance isn’t just a one-year thing,” the company said.
The Department for Education and Employment said that the Prudential had been recommended to teachers after a review in 19889 had shown that it offered the best scheme. The department said: “Teachers don’t have to go into the Prudential AVC if they don’t want to, but as far as its performance is concerned we’re fairly satisfied.”
David White, pensions marketing manager for the Prudential, said its AVC was “a very different contract” from the regular-premium pension featured in the Planned Savings survey, and the make-up of the charges was also very different.
Mr White said: “Charges are always open to interpretation. The most important thing is the bonus payments, which drive the value of the pension much more than do the charges, and bonuses on the teachers’ AVC scheme have held up very well against everyone else.”
