I remember reading an Observer article, probably in the 1970s so there's no chance of it being on the internet, about teachers' pensions. I was definitely still in teaching and I think it was around the time of the Clegg award. I just tried googling that and ended up with a load of picture of Nick Clegg, so that was no help. The Clegg award of circa 1981 was designed to bring teachers close to where they were in 1974 after the Houghton award, which is mentioned in this Graun article from 2001. https://www.theguardian.com/news/2001/feb/03/leadersandreply.mainsection
Anyway, back to the point I was about to make. The said article about teachers' pensions stated, correctly, that the money was not being invested in a "pensions pot" but was simply being clawed back, and teachers' pensions were paid from general taxation according to a formula of 1/80th of your salary for each year that you taught. The article said that this was very unjust as those pension schemes that actually invested the money in the stock market were racing way ahead of the rate of inflation at the time, and therefore well ahead of teachers' pay rises. The Civil Service scheme was similar, except that was non-contributory. When I switched from one to the other, there was no pensions pot there either, but a sum of money did change hands. I may still have the paperwork somewhere, but IIRC about £10k was transferred from the teachers' to the CS scheme in 1986, when I changed careers.
Given that the article I'm referring to singled out teachers' pensions, and not public sector pensions in general, would imply that other bits of the public sector did indeed have "pension pots". You may recall not many years ago when public sector pensions and their recipients were under attack from the gutter press because private sector pensions did not have the "gold plated" pensions that civil servants and teachers had.
There are two words which sum up the shafting of private pensions schemes: Margaret Thatcher. It was under her influence that the good old endowments mortgages also became useless. I'm guessing that people who paid into an NHS pension ended up being royally screwed by Thatcher and her successors. Gordon Brown also did a lot of damage when he gave employers "pensions holidays".
I would be very interested to find out whether your contacting out was something you chose to do or whether it happened by default.
OK, quick pensions lesson!
At the time of your teaching employment, most Government schemes were unfunded, although the Local authority ones were funded. However, what they did have in common was that they were final salary schemes, meaning you get a set amount of salary for each year of service, such as 1/60th or 1/80. Teachers got 1/80th for each year of employment for pension, plus 3/80th of salary as a tax free lump sum, which in monetary terms was broadly equivalent to getting 1/60 for pension and then having to commute some of that pension for tax free cash.
At that time, many large company schemes were also final salary schemes, also often called defined benefit, meaning you easily knew what your pension benefit would be at retirement age. In a funded final salary scheme, they'd work out all the potential liabilities for all the employees, and make assumptions for the number of deaths, early retirements and leavers, and know that at any given point in time they'd need £x pa to pay out benefits for everyone. Then you add on assumptions for future investment growth based on whatever assumptions they decide to use based on a comprehensive spread of assets, fund costs etc etc, to then arrive at an annual cost required to be paid to cover all the liabilities, on the assumption the scheme carries on. In most schemes, employees paid some of the cost, with employers paying the majority. And if there was an unexpected event, such as a stock market crash, then employers would have increase their contribution. *
Similarly, when over the years legislation gradually required better benefits, such as more index linking, generally employers had to pay the majority of the cost. The scheme would however carry on, guaranteeing the levels of benefits, with the employer being liable to a large extent for ensuring the overall fund was adequate to provide the required benefits for everyone.
The unfunded Government scheme, just like the State pension, are all paid for out of the Government's general taxation income. And the potential liability for those is a very big figure. But that's another story.
However, prior to 2016 regardless of being funded or unfunded, if you left a Government pension scheme, you were entitled to have a transfer of the notional value of your accrued pension. In very simple terms, if your leaving salary was say £40,000 and you'd accrued 30/60ths meaning a pension of £20,000 which would then be index linked to your retirement age, they'd work out what that rolled up pension would be, then work backwards to arrive at what lump sum would need to be invested now, and grow (based on a defined set assumptions for investment growth and costs) to then be of sufficient size to secure whatever that rolled up pension is. And that lump sum would be the transfer value.
Personal pensions operate on what's called a money purchase basis - money goes into a policy written in your name, invested in whatever fund you want, and whatever it's grown to at your retirement age is used to secure benefits, (or even cashed in). The point is you bear the investment risk, so if you decide (or are advised) to invest in Russian property (for example) and it all collapses the day before you retire, you lose. In a large funded final salary scheme, they wouldn't invest in a single asset, so reducing risk, and being a pooled fund, investment risk is spread, with the employer being liable for most of any long term increase. A short term fall in the stock market wouldn't make a large scale change in the fund, as they'd assume in the long term that markets would recover.
Unfortunately, Mrs Thatcher's Government, in encouraging private provision, meant lots of unscrupulous salespeople persuaded people to opt out of their final salary scheme, on the basis of the then booming stock market - ignoring the fact that in a personal pension, they no longer had the benefit of the employer's contribution. A lot of nurses were conned into coming out of the NHS scheme for example, although most were hopefully compensated and bought back into their original schemes as they had never opted out, under the pension mis selling campaign in the 1990's.
Personal pensions could only contract out of SERPS from 1988 onwards (but if set up then could also cover 1987). Employer schemes could however contract all their employees out in bulk from 1978 onwards.
* Back in the early 80's when I worked for Sun Life, one of my tasks was working out the liabilities to arrive at an employers funding rate for a number of company pension funds. Incredible complex manual calculations. Took me ages with a reverse polish logic calculator.