it's still better to stick with the Pru, despite official censure, pension advisers say. Susannah Kirkman reports
Should teachers still put their trust in "the man from the Pru", following the latest lambasting of the Prudential, this time by the Government's new City watchdog, the Financial Services Authority?
More than a fifth of UK teachers are now topping up their pensions through the Prudential's additional voluntary contributions (AVC) scheme, but despite the most recent rebukes levelled at the company, teachers' unions are advising their members not to panic.
Marion Bird, deputy head of pensions at the Association of Teachers and Lecturers, said: "We have been concerned that teachers would rush out and take out free-standing AVCs (see footnote), which carry more risks than the in-house scheme. The latest reports from Prudential show that their AVC scheme is keeping up well with its rivals."
Criticisms of the Prudential by the Financial Services Authority last month included claims that the company had a disposition against abiding by consumer laws, was still selling unsuitable products and was failing to put investors' interests before those of the company.
Brian Clegg, deputy general secretary of the National Association of Schoolmasters Union of Women Teachers, says that there is a real resistance from some teachers to trust the Prudential again. He is aware of teachers mis-sold personal pensions by the Prudential who, because of their deep distrust, have initially refused to supply the company with the information needed to reinstate them into the Teachers' Superannuation Scheme.
But Mr Clegg says that, after a slow start, the Prudential is now making a serious effort to compensate victims of mis-selling.
Marion Bird says that Treasury minister Helen Liddell's policy of "naming and shaming" insurance companies who were dragging their heels over pension compensation has had dramatic effects.
Mr Clegg is less sanguine. He reports that the Government's "blacklist" of 41 insurance companies represents only half of those involved in cases of pensions mis-selling to teachers.
He also complains that companies are trying to get themselves off the list by persuading teachers to sign guarantees of redress without providing details of what the comp-ensation will amount to. The NASUWT is advising members not to sign these.
* Freestanding AVCs can be purchased from the insurance company, unit trust, or building society of the teacher's choice but charges tend to be higher than those for the teachers' AVCs managed by the Prudential.