Prepared to get personal
People in employers' pension schemes have been allowed since 1988 to move their money into personal pensions run by private insurance companies and sold by salespeople who were often on commission for every new customer they signed up. An estimated 30,000 teachers have opted out or transferred out of the Teachers' Superannuation Scheme (TSS), according to the Teachers' Pension Agency.
But since 1993 the Association of Teachers and Lecturers and other teacher unions have been uncovering evidence that many people were mis-sold personal pensions. Teachers have won compensation worth thousands of pounds from companies which sold them these pensions with claims that they would retire with much more money than the TSS could provide, but which left them worse off than if they had stayed put.
However, Ian Hopkins, an economics and business studies teacher at Hewett School in Norwich and a former financial consultant, says there are still advantages to personal pensions which, depending on the circumstances, can continue to make them the best bet for an individual teacher - and people who left the TSS should not necessarily despair. They could, he says, be making a mistake if they ditch their personal pension and try to move back.
In particular, he says, if they are young and the Government succeeds in keeping inflation low, growth steady and public-sector pay rises down, a personal pension is likely to give better returns than the TSS will be able to.
Mr Hopkins is now producing a quarterly newsletter called Teachers in Personal Pensions, in which he hopes to provide information about the pros and cons of each type of scheme.
He said: "The newsletter is there for people who are in personal pension schemes and who want to stay in them. My intention is to discourage people from making hasty decisions about trying to return to the TSS and to give them relevant news, facts and help.
"I am not allowed to give people personal advice, as I am still a shareholder in a financial consultancy which is tied to a pensions and insurance company. I am not telling people 'yes' or 'no' about personal pensions, just giving them support to make up their own minds. Teachers who opted out of the official scheme have been branded as fools and the victims of fast-talking salespeople. But there are still those who prefer the personal pension and value their freedom of choice."
Mr Hopkins dropped out of the TSS in 1986, taking out a personal pension plan when he left teaching to become a financial adviser, and kept his personal pension when he came back to teaching in 1991.
However, the NUT remains dubious about the prospects for teachers who stay outside the TSS. A union pensions spokesperson said: "Nothing is ever 100 per cent, but I would find it difficult to conceive of a situation where a teacher who elected to stay within the profession would ever be better off purchasing a personal pension."
Copies of the newsletter can be obtained by sending a stamped self-addressed envelope to Mr Hopkins at Hewett School, Cecil Road, Norwich NR1 2PL.