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The Great Pensions Escape

Record numbers are going early and losing money to avoid being forced to teach until 65. Susannah Kirkman reports

Andy Garner, 55, has just forfeited a quarter of his pension so that he can take early retirement. "I am worn out with all the changes in education," he says. "Teaching is unmitigated stress." Mr Garner, who taught secondary history, is one of the record number of teachers now so desperate to leave that they are retiring early on reduced benefits. The latest figures show that 28 per cent of teachers retired early with actuarially reduced benefits (ARBs) last year, the highest number ever and up five percentage points on the previous year.

But so far there is little sign that the Department for Education and Skills will back down significantly on plans to raise the pension age to 65 in 2013. A recent Treasury paper presented in July to the Public Service Forum - where ministers meet the TUC and other national union officers - does not appear to offer any significant new concessions to teachers.

Although the Treasury has watered down the original plans for local government staff, civil servants and other public-sector workers, there does not seem to be any softening of the stance on teachers' pensions. The Treasury paper suggests that someone aged 52 today would still retire on a full pension at 60, while a 20 year-old would have to work for an extra two and a half years to get the equivalent of today's full pension. The Treasury has also made a commitment to use half of the money saved by the pension changes - around pound;4 billion - to improve benefits.

This will be good news for local government workers, who had originally been informed that their pension age would rise to 65 in April 2005.

However, teachers have already been told that no one aged over 50 in September 2003 would be affected by the changes, and that new entrants to the profession would have to work until 62 and a half or 63 to receive the same as the current pension. The DfES had also pledged to plough back half of the savings created by the new teachers' pension scheme into reforms like increased death benefits.

The teaching unions are waiting to see whether the Government can produce more convincing ideas to sweeten the pensions pill for teachers when negotiations resume later this month.

"The retirement figures show that teachers are increasingly desperate to leave in their mid-fifties and are prepared to take huge cuts in their pensions to do so," said Marion Bird, deputy head of pensions at the Association of Teachers and Lecturers (ATL). "This won't square with the Government's determination to make them work on until 60 before they can even qualify for a reduced pension."

Teachers retiring today at 55 will see their pension slashed by around 25 per cent, yet this is the peak age for those going with actuarially reduced benefits.

Most of the unions are contemplating strike action if the next round of negotiations fails. Members of the NASUWT have already voted for a strike ballot if the Government goes ahead with its pension proposals, while the NUT only suspended plans for a ballot after the Government agreed, before the general election, to fresh discussions. Meanwhile ATL members have also agreed to consider striking over the issue.

"I have never been prepared to strike over anything before, but the pension proposals are so short-sighted," said Gill Stainthope, a support teacher who works with asylum seekers in Bury, Lancashire. "Once teachers get past 58, they are struggling. I know many people who are ending up taking ARBs against all the advice because they just can't carry on. How on earth people are expected to go on until 65, I don't know."

The pressure is on to find a solution so that teachers can enjoy tax-free benefits that will be available to all employees when fundamental pension reforms for all are introduced next April. Specifically, teachers' right to take as a tax-free lump sum 25 per cent of their additional voluntary contributions (AVCs) - extra money they pay into to boost their pensions - is dependent on the agreement of the new package.

According to the DfES, the new flexibility offered to most AVC holders is not an automatic right, but it does not want to discriminate against teachers. A spokesman said; "it is for (individual) schemes to decide whether it will be adopted. It is not our intention to disadvantage members and we will be considering all the options the most appropriate approach for the whole TPS (Teachers' Pensions Scheme ) package."

The Government says it is anxious to avoid confrontation by introducing pension reforms gradually, but with pension costs for the public sector running at pound;13 billion a year, it has to make cuts to avoid a rise in taxes.

According to the Pensions Policy Institute, even after the proposed changes, public-sector pensions will still be worth an extra 3 to 18 per cent of salary, compared to private sector schemes. It found that public-sector employees are twice as likely to be in a final-salary scheme.

Many final-salary schemes have now been closed in the private sector, and those that still exist often offer inferior benefits.

The report also said there was no conclusive evidence that pay is worse in the public sector, although recent Treasury figures suggest that graduate public-sector workers in London and the South East are actually worse off than their private-sector counterparts.

Small comfort for teachers. Many are dismayed that constant changes and declining standards in pupils' behaviour are forcing out experienced staff.

Mr Garner sees no cause for celebration in his early departure. "I think it is sad when colleagues say: "Congratulations. I wish I could retire.' I think it reflects badly on the profession that so many want to leave. We should be doing everything we can to make sure that experienced people want to stay."

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