The Switch to Private Pension Plans for Teachers, 1982-2002: a case of freedom of choice or financial scandal?
FORUM - ISSN 0963-8253
Volume 51 Number 2 (2009)
The Switch to Private Pension Plans for Teachers, 1982-2002: a case of freedom of choice or financial scandal?
CLIVE GRIGGS pages 241-258
DOI: 10.2304/forum.2009.51.2.241
Abstract
In the early 1980s the Conservative Administration introduced legislation to promote private personal pension plans for public sector workers. An army of commission-driven sales staff from the financial services industry sought to persuade teachers and others to abandon their inflation-proof pension schemes for those offered by private companies. It took some time before it was realised that this was a retrograde step for most employees taking this advice. Fortunately, trade unions were well represented within the public sector and they interceded on behalf of their members and exposed the fraudulent behaviour of established financial companies. The Financial Services Authority not only fined the financial services companies thousands of pounds but forced them to restore employees to the situation they would have been in if they had ignored the advice given earlier. This financial scandal took nearly 20 years to resolve satisfactorily. Teachers and other employees learned a hard lesson: most private companies put the profit motive before service to customers, they are not necessarily more efficient than the public sector and financial consultants are, in effect, sales persons whose advice is usually motivated by commission and bonus payments. Painful though the experience of many teachers had been, by the Autumn of 2008 the whole country would be shaken by the disastrous effects of a weakly regulated free market financial system.
To cite this article
CLIVE GRIGGS (2009) The Switch to Private Pension Plans for Teachers, 1982-2002: a case of freedom of choice or financial scandal?, FORUM, 51(2), 241-258. https://doi.org/10.2304/forum.2009.51.2.241