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Go early and you might go broke

TEACHERS AND further education lecturers could be forced into poverty if they snatch at offers to retire early under revised pension plans floated south of the border.

Union leaders have warned about the long-term risks of quitting the classroom at 55 on a reduced pension after ministers at the Department for Education and Employment last week ordered a review of provision.

The Scottish Office Pensions Agency has confirmed it will consider similar changes. A spokeswoman said: "This scheme is purely for England and Wales. Similar proposals intended to introduce a greater measure of flexibility into teachers' retirement arrangements are under consideration in Scotland. Any changes will involve full consultation."

Scottish teachers belong to the same scheme as colleagues in England and Wales and changes are almost certain to affect staff north of the border. But David Eaglesham, general secretary of the Scottish Secondary Teachers' Association, cautioned against euphoria. "It may be sold as a panacea to teachers but it may only be a short-term solution."

Sue Johnson, head of pensions at the Association of Teachers and Lecturers, calculates that a teacher with 25 years' service on pound;26,000 would lose more than pound;2,000 a year. The lump sum payable on retirement would be cut by around pound;3,680.

Mr Eaglesham, who sits on the UK working party on teachers' superannuation, said: "It's akin to surrendering an endowment policy early. If there is a 20-year policy the best time to surrender it is after 20 years. If you do it at 18 years, you lose financially. People would have to accept a much lower pension."

Fred Forrester, depute general secretary of the Educational Institute of Scotland, welcomed a review but warned: "There is an obvious danger that hard-pressed authorities will encourage teachers to go for actuarially reduced pensions in cases where they would previously have offered premature retiral, with or without enhancement."

Carol Fox, Scottish official of the National Association of Schoolmasters Union of Women Teachers, gave the plans a "guarded welcome". "There are serious implications about teachers being pressurised into going at 55," Ms Fox said.

The NAS favours a German model which allows teachers to phase in retirement, working for part of the week.


UNDER THE outline scheme south of the border teachers could be given flexible options as they near retiral.

It is planned to consult on plans to introduce "actuarially reduced" pensions for teachers aged 55 and over. Currently they are not entitled to draw their pension before 60.

Premature retirements will still be allowed, though only for redundancy or in the interests of efficiency. Early retirement because of ill-health will not be affected, except when teachers have less than five years' service. Their benefits will be improved.

The actuarially reduced pensions would be combined with apackage of improvements, funded by employers. Rises in employers' contributions could add 1 per cent to the pay bill south of the border.

The teachers' scheme will continue to be a notional fund. Unions have argued that benefits would have been far higher if the fund had been invested in the market. The Government currently guarantees the pension.

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