Prudential assurance representatives have been accused of misleading a Hampshire school’s staff by telling them they could retire years early “just like deep-sea divers or airline pilots” if they topped up their pensions.

And a college principal in his 40s only discovered this month that he has been paying additional voluntary pension contributions to the Pru for the past two-and-a-half years in the mistaken belief that he would be able to take voluntary early retirement.

The revelations are a further embarrassment to the Prudential, which has already been heavily criticised over allegations that sums of up to Pounds 2,000 paid by teachers to its AVC scheme had been mislaid.

At least two of the 70 teachers who attended the Pru presentation at Bridgemary community school in Gosport, Hampshire, last September took the advice and started paying 9 per cent of their salary a month as AVCs. Both say they were told the payments would enable them to retire at 53.

It was only by chance a few weeks later that the two women, both in their 20s, learned that the advice was wrong, and the money they were paying to the Prudential, which runs the official in-house AVC scheme approved by the Teachers’ Pension Agency, could not provide them with a guaranteed early retirement.

The TPA will not pay out from the Teachers’ Superannuation Scheme to anyone who wants voluntary early retirement before the age of 60. Benefits from AVCs will not be paid until benefits from the TSS are due, so they cannot be taken early, either. Worse, the maximum the two should have been paying as AVCs was less than 3 per cent, and there was a danger that when they came to retire they could have been hit with a 35 per cent tax charge because of over-funding.

One of the two, Louise Hamblin, 27, a PE and geography teacher at the Bridgemary School, said: “The people from the Pru came in and made a presentation and basically said to us that AVCs existed so that people like us could take early retirement. They sold us the idea of paying more so we could retire early voluntarily like other people in stressful occupations, such as deep-sea divers and airline pilots. The whole school staff was there and we were all asked to fill in forms if we were interested.”

Ms Hamblin and a colleague, Nicola Hill, each spoke later to a Prudential representative making it clear they wanted to fund an early retirement plan. They were signed up for the Pru’s AVC scheme at the maximum contribution rate, which they were told was the best way to pay for early retirement. However, a few weeks after starting her payments, Ms Hamblin happened to mention how much she was paying in AVCs to the man who arranged her mortgage, Garry Spencer, of Wilbury Financial Management in Hove, Sussex. He told her she might be paying too much, and said he would investigate.

Last week Mr Spencer said: “Louise and Nicola were each given a form by the Prudential representative which recommended in writing that they pay 9 per cent of their salary as AVCs for the purpose of funding voluntary early retirement. It was totally incorrect advice.

“There is nothing wrong with the AVC scheme per se - it’s a good one. But I don’t think teachers are always being made aware of the restrictions. My biggest worry is that AVC schemes are being sold as the answer to voluntary early retirement, which for teachers is not necessarily possible.”

Ms Hamblin, who has, like Ms Hill, stopped her AVC payments, told the Prudential she felt she had been sold the scheme under false pretences. She is now demanding her money back. She said: “It was a fair whack of my salary every month, and if I had got to 53 and found I could not retire early after all, I would have been incandescent. Thank God Garry found out.”

Another apparent victim of alleged wrong advice from the Prudential, Bruce Chisholm (not his real name), is a college principal contemplating early retirement in a dozen years at the age of 55. He has been paying AVCs since the summer of 1992, having allegedly been told that these would fund his early retirement. Six weeks ago he was advised by a Prudential representative, he says, to increase payments to the “maximum” 9 per cent.

Although he says he was told his fund would be observed to make sure there was no overpayment, there was no indication that he would not be able to draw on his AVCs to fund early voluntary retirement, the reason he entered the scheme. “Now I learn there is no way, except at the discretion of your employer to get your superannuation, and with it your AVCs, until you are 60. I was never told this by the Pru,” an angry Mr Chisholm said last week.

Leading teacher unions say they are not aware of “widespread” bad practice in the selling of AVCs. Barry Fawcett, the National Union of Teachers’ pensions expert, said: “Our experience with the Prudential has generally been good, and we have no evidence of any serious problems. But there are 90,000 teachers in the Prudential AVC scheme and in an operation of that size it wouldn’t be surprising if occasionally something went wrong.”

The Prudential’s compliance department, which was told of Ms Hill and Ms Hamblin’s allegations three months ago, has still not given them an explanation. However, a spokesman for the Prudential said that it was taking the allegations “very seriously - if for any reason the Prudential is found to be at fault we will endeavour to put things right. If somebody has fouled up, appropriate action will be taken.”

Meanwhile, Mr Spencer castigated insurance companies for not stressing the benefits of purchasing past added years - a point underlined by the National Association of Schoolmasters Union of Women Teachers. Brian Clegg, one of the union’s officials, said: “If I were allowed still to give advice, as I was before the Financial Services Act, I would tell young teachers in particular to purchase past added years.

“These benefit your dependants even if you drop dead without completing paying for them. If companies were giving genuine best advice, there would be many more buying these. But there’s no commission on it for the rep.”