Teachers given wrong advice over personal pensions face a long wait for compensation, Martyn Cornell reports. Teachers who were wrongly advised to take out personal pensions may have to wait a year longer than expected for compensation.
The 2,000 claims that have been lodged by teachers who opted out of the profession's superannuation scheme were supposed to be reviewed over the next year. The financial services industry's watchdog body, the Securities and Investment Board, had asked firms to complete their reviews of claims made by retired teachers and the families of dead pension-holders by the end of next month. It was also expected that men aged over 55 and women aged over 50 at the time of the transaction would have had their cases considered by December 31.
The SIB hoped that all other personal pension-holders would have their cases reviewed by December 31, 1996, but said that in the event of delays priority should be given to men who were 50-54 and women aged 45-49 at the time the pension was taken out. These deadlines have slipped badly, however, and many pensioners and soon-to-retire teachers have been left in a limbo.
Insiders say the delay in getting the reviews completed is partly because of the huge number of cases that have to be considered - claims have been lodged by about 81,000 people who were advised to transfer pension funds from an occupational scheme to a personal plan. But both large and small companies have undoubtedly been dragging their feet. Many firms seem to be waiting for courts to clarify some of the many complexities these cases have thrown up. One fear is that if they settle cases now they may hand over more money than the courts will later rule is necessary.
Brian Clegg, assistant general secretary of the National Association of Schoolmasters Union of Women Teachers, which has about 200 members waiting for compensation, said that teachers would be "appalled" to hear about the delays. "Nobody has officially admitted that the system cannot cope and they can't deliver the reviews for all those people involved, but everybody I have spoken to accepts that the deadlines are going to slip by at least 12 months," he said.
"It's getting silly - we have only seen half-a-dozen of our members sorted out so far. The more the timescale slips, the more people reach retirement age before things are sorted out."
Compensation involves putting sufficient money into the Teachers' Superannuation Scheme on a teacher's behalf to bring them back to the position they would have been at if they had never transferred out. Typically this involves the insurance company or independent financial adviser which gave the incorrect advice handing over between Pounds 20,000 and Pounds 30,000.
However, Mr Clegg said, in the case of at least one NASUWT member, the insurance company that had wrongly advised her to leave the TSS had to pay out Pounds 80,000. The highest award to date - just over Pounds 100,000 - is believed to have gone to a member of the Association of Teachers and Lecturers. Ironically, he had left teaching to work for a financial services company that sold personal pensions.
Mr Clegg said: "The smaller financial advisers involved in this will find it hard to afford such big claims. This is worrying if they go bust as a result - and as the timescale slips we are getting concerned about the larger firms as well."
A spokesman for the Personal Investment Authority, the "front-line" regulator that acts on behalf of the SIB in most areas affecting private pensions, said it was impossible to say whether the deadlines would be met. "The picture is still building up as to how the review process is going - most initial returns are in, and we are chasing up the firms that have not yet given us the required information." However, he agreed that there have been "one or two delays". One problem was that smaller firms had been waiting for software to enable them to calculate reviews properly.