Thousands of teachers wrongly advised to buy personal pensions are still waiting for compensation, reports Susannah Kirkman. Insurance companies and independent financial advisers are still dragging their heels over compensation for teachers who were wrongly sold personal pensions, even though it is a year since the deadline expired for dealing with urgent cases.
More than 30,000 people have opted out of the Teachers' Superannuation Scheme, many to take personal pensions. Teachers' Pensions, formerly the Teachers' Pensions' Agency, estimates between 8,000 and 10,000 teachers may have been wrongly advised to leave their occupational scheme. Most are still waiting for compensation, and some have been left in dire financial straits.
Figures from the Department for Education and Employment show that around 82 personal pension providers are dealing with teachers' compensation claims, but a large proportion of the cases are in the hands of only 14 companies. At present, the Natwest UK Pension Unit is considering 920 cases, Teachers' Assurance 400 and Barclays 300.
Independent financial advisers have been the slowest to act, according to the National Association of Schoolmasters Union of Women Teachers and the Association of Teachers and Lecturers. These unions are about to sue Waring Marshall, a firm of independent financial advisers, over delays in considering claims.
Brian Clegg, assistant secretary for salaries and pensions at the NASUWT, says that independent financial advisers are taking no action over compensation claims from teachers. Marion Bird, deputy head of pensions at the ATL, agrees. "The bigger companies may be slow, but they are moving forward. The independent financial advisers are still denying responsibility."
According to a leaked report by the Personal Investment Authority, the watchdog in charge of the compensation process, one of the worst overall offenders among larger companies is the Prudential, which runs the in-house additional voluntary contribution scheme for Teachers' Pensions. The report says the Prudential has only filed compensation to 10 people, although it has more than 41,000 priority cases waiting.
But the Prudential, which is reviewing 110 cases involving teachers, shows signs of improvement. Marion Bird says that since the ATL put pressure on the company, it has pursued and settled the most urgent cases quickly. The company also put into place an updating system so that teachers knew exactly how far down the line they were with their claims.
Eight ATL cases remain to be settled with the Prudential. But more than 200 ATL members have not yet been offered compensation by other companies involved. "Teachers retiring without a pension and without compensation are really suffering," says Marion Bird. "Those who took early retirement on the grounds of ill-health are just getting incapacity benefit." This amounts to just Pounds 61.50 a week for single people or Pounds 97.75 for those with a dependent partner.
The delay is creating problems for teachers approaching retirement, according to Mike Beard, head of pensions at the National Association of Head Teachers. "It's very stressful knowing that a chunk of your pension is still tied up and you can't get at it," he says.
Marion Bird is puzzled by the disparity in the time taken to settle claims. While Confederation Life, now Sun Life of Canada, has dispatched claims within four to seven months, other companies have taken more than two years. "Apart from Confederation Life, Abbey Life and Guardian Life, virtually every other company is dragging its heels," she says.
According to a spokesman for the Prudential, a mountain of paperwork has held up compensation: the company has more than 150 staff working on claims, but they have had to send out 663,000 questionnaires to determine whether customers have been sold pensions wrongly.
Speedy settlements from Confederation Life are the result of the company working on cases immediately, instead of waiting for the PIA's guidelines on compensation procedures. According to a spokeswoman: "We had already established which cases needed compensation by the time the PIA issued its regulations."
Barry Fawcett, assistant secretary of the National Union of Teachers, is optimistic that claims will be settled more quickly now that insurance companies and Government actuaries have reached agreement on the costs of reinstating teachers into the Teachers' Superannuation Scheme.
"We are trying to ensure that urgent cases - those who are about to retire and those taking ill-health retirement - are dealt with more quickly," he says. The NUT has about 1,000 members waiting for compensation.
The pensions scandal means there is growing distrust of insurance companies among teachers. There is suspicion that some companies which had established links with teaching unions traded on their credibility to sell inappropriate pensions.
"It is noticeable that companies with easy access to teachers were the ones that got themselves through the school gates," says Marion Bird.
"Teachers are now very reluctant to trust anyone, which is counterproductive when you're trying to persuade them to improve their pension prospects. We've tried to assure members that the Pru is functioning well, but inevitably they still have their doubts. The industry has brought the situation on itself. "
TEACHERS STILL GOING FOR PERSONAL PENSIONS
Despite the scandal over personal pensions some teachers are still leaving the Teachers' Superannuation Scheme and making their own pension arrangements, according to the Department for Education and Employment. The DFEE says that teachers trying to leave the TSS may now have to sign a disclaimer saying that they know it may not be in their best interests. Although those with no dependants or partners to whom they are not married may be justified in opting out of the TSS, it is still the best bet for the vast majority, says the DFEE.