Stephen Ingledew offers tips for teachers and lecturers caught up in one of the biggest financial scandals of the century.
Many teachers and lecturers who lost out in the personal pensions debacle will have been left disappointed by last week's Securities and Investments Board (SIB) report.
The report specifies how the financial services industry is to deal with the many individuals who have received bad advice and sets out the timescale within which each of the estimated two million cases will need to be reviewed.
The industry faces the prospect of paying between Pounds 2 -3 billion in compensation to the victims of what is seen as one of the biggest financial scandals of the century. But it is now clear that many of the aggrieved personal pension-holders will not have their cases reviewed until 1996.
In the meantime, they will be asking themselves - not for the first time - whether they actually received bad advice and, if they did, what action they can now take to ensure that they are eventually compensated.
The SIB, the sector's watchdog, has identified two main types of bad pensions advice: "opt outs" and "transfers". What does this mean for teachers and lecturers?
Pension opt outs: This is where a teacher or lecturer has been advised to leave or not join the Teachers' Superannuation Scheme (TSS) or Universities Superannuation Scheme (USS) in favour of a personal pension scheme while still employed in the teaching profession.
Pension transfers: This is where someone has left the teaching profession prior to retirement and been advised to switch the pension benefits they have built up in the TSS or the USS to a personal pension plan.
Teachers and lecturers who have been advised to opt out or to transfer in favour of a personal pension scheme are prima facie deemed to have received bad pensions advice. This is because the guaranteed and index-linked benefits of the TSS and USScannot be matched by any personal pension scheme.
But what should you do if you have been given bad pensions advice?
Any teacher or lecturer who believes they may have been poorly advised is recommended to take all of the following courses of action immediately.
1 Contact the financial adviser and insurance company who advised you initially on "opting out" or "transferring" and ask for the advice to be reviewed within one month.
2 Send details of all correspondence to the financial industry regulators. The two main regulators are SIB and the Personal Investment Authority ( PIA ).
3 Forward details of the bad advice to your union and your MP.
The scale of the problem is massive. Therefore the SIB has identified 250,000 opt-out priority cases which need to be reviewed by December 31, 1995.
These are cases where the individual has died or retired or where the employee was over the age of 35 at the time of opting out and is still with the same employer.
There are a further 100,000 transfer priority cases which need to be reviewed by December 31, 1995.
These are cases where the individual has either died or retired or was over the age of 55 (for men) or 50 (for women) at the time of transfer.
Any teachers or lecturers who are regarded as priority cases will be contacted by the financial adviser and insurance company in order to have their case reviewed by the end of 1995.
However, whether a teacher or lecturer falls into the priority group or not, it is recommended that the aforementioned course of action should still be followed immediately.
What redress will be given?
The redress a teacher or lecturer may receive depends on the individual circumstances of the case. The best scenario for an individual still employed in the teaching profession will be to rejoin the superannuation scheme with full benefits being reinstated.
For individuals who have left the teaching profession and transferred benefits to a personal pension, the best solution would be for compensation to be paid into the personal scheme to bring benefits to an equivalent level to those which would have been obtained under the superannuation scheme.
An important point to note is that you will only qualify for redress or compensation if the financial adviser broke the regulators' rules and as a result you suffered a financial loss or might do so in the future (that is, on retirement).
What, then, has been the effect on the teaching profession?
From the cases which have come to light already, we know that teachers and lecturers are one group of employees who have experienced some of the worst examples of bad pensions advice from financial advisers.
The Teachers' Pension Agency has estimated that 30,000 teachers have opted out or transferred out of the TSS to date. Yet the various teaching unions have only identified around 10 per cent of these cases. It is vitally important that all teachers and lecturers who are concerned about the advice they have received on pensions take action now.
Stephen Ingledew is development director of Frizzell Life Financial Planning Ltd Important dos and don'ts Have you received bad pensions advice?
* Do contact the insurance company, regulators and your trade union now.
* Do persist in having the advice you have been given reviewed immediately.
* Do not accept anything less than full reinstatement or full equivalent benefits as compensation.
Useful Contacts * Personal Investment Authority Pensions Unit. 5th floor, 1 London Wall, London EC2Y 5EA. Tel 071-417-7001 * SIB Pensions Factsheet. PO Box 701, Basildon, Essex, SS14 3FD * Teachers' Pension Agency. Mowden Hall, Darlington, Co. Durham DL3 9EE.
Tel 0325 392929