Martyn Cornell on two teachers' continuing battle with a pension giant.
Two women at the centre of a row over the alleged mis-selling of the retirement top-up scheme approved by the Teachers' Pensions Agency have been offered Pounds 50 each by the Prudential Assurance, the company whose salesmen sold them the policy.
But the two, both teachers at a Hampshire school, are still pressing for the return of the premiums they paid in to the additional voluntary contributions (AVC) scheme. They are angry that it took the Prudential eight months to respond to allegations of over-selling, accusing the company of being more interested in getting their money than in their financial circumstances.
As we reported on February 24, the saga started after Prudential representatives allegedly told staff at Bridgemary community school in Gosport, Hampshire, that they could retire early "like deep-sea divers or airline pilots" by topping up their pensions with AVCs.
At least two of the teachers there, Louise Hamblin and Nicola Hill, both in their 20s, told Prudential representatives they wanted to be able to retire at 53, and were signed up into the Teachers' Superannuation Scheme "in-house" AVC plan, run by the Pru, that took the maximum allowable, 9 per cent of their salaries every month.
The women say they were left with the impression that the AVCs would automatically allow them to retire at 53. But there is no provision for automatic voluntary retirement in the TSS. Benefits, including AVCs, can only be paid before the age of 60 at the discretion of the employer. In addition the two teachers were paying far too high a percentage of their salaries into the scheme for people of their ages, with the risk that they would "overpay" and suffer tax penalties.
They say they only discovered the true facts, and immediately stopped their payments, when by chance Ms Hamblin spoke to her independent financial adviser, Garry Spencer. Both women wrote to the Pru inn Spetember last year, complaining that they had been mis-sold the scheme. But, it is only now that the company has written to them, offering Pounds 50 each for any distress caused, but insisting its salespeople did not give misleading advice, and saying the two teachers ought to continue with the AVC schemes.
Ms Hamblin, 27, a PE and geography teacher, said: "The letter from the Pru told us a lot of teachers are able to retire early, and it was sorry if we had inferred from what its salespeople had said that there was any unconditional right to retire early. What they are saying is that we should continue with the AVCs on the off-chance that we might be offered early retirement."
Ms Hamblin said that she and Ms Hill still wanted the premiums they had paid, amounting to around Pounds 200 each, returned. She said: "I couldn't have afforded to continue paying at the rate they suggested anyway. There was no real attempt by the salesman to look at my outgoings, they just seemed interested in getting as many people into the scheme as possible. Since then they've brushed it under the carpet."
Earlier this week, a Prudential spokesman said:"We are sorry Ms Hamblin and Ms Hill were under the impression that it would be possible to voluntarily retire early under the TSS. We have reviewed the literature and the presentation materials and are unable to see how the concept of a guarantee of early retirement arose. We would urge them seriously to reconsider their decision to stop AVC contributions."