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Sitting on a pensions time bomb

The Government is desperate to save money by cutting the number of teachers retiring sick. Karen Gold reports.

A pensions shake-up this autumn will put schools, local education authorities and stressed teachers into the front line of the Government's battle to keep up staff numbers and to restrain the spiralling cost of the profession's pensions scheme.

Measures planned for September by the Department for Education and Skills, which include raising the retirement age to 65, also aim to force LEAs and schools to cut back the number of their teachers who take ill-health retirement. They include:

* A new "league table" showing which LEAs have the highest rates of ill-health retirement;

* A new requirement that all LEAs publish the cost of teachers who retire sick in their annual financial reports;

* A warning letter to the 25 per cent with the highest ill-health retirement rates, telling them these must fall to the level of the 25 per cent of authorities with the fewest, by 2005;

* A threat that the DfES, which normally funds teachers' pensions, will make authorities whose retirement rates stay high pay half the cost of the pensions granted to the extra teachers they lose. (On average, this would cost an authority pound;30,000 for every extra teacher who retired sick.).

LEAs point out that ill-health retirements can vary because some authorities may be more generous than others and regional psychiatrists may take a different attitude. But the most likely reason is the difference in age: London and the South-east have many younger teachers who are less likely to be eligible.

The changes will focus attention predominantly on the 1,200 teachers a year who retire with mental health problems - those with cancer and heart disease have a much clearer-cut case, say experts, than anyone who has to prove that their psychiatric state will prevent them ever entering a classroom again.

A DfES-sponsored pilot scheme involving six LEAs (Barnsley, Darlington, Kirklees, Luton, Manchester and Stoke-on-Trent) and academics from Northumbria University, due to finish at the end of this term, is expected to show that a mix of prevention, early intervention and pre-pension hurdles can bring these numbers down.

The DfES has already said that it will adopt some of the changes which have been trialled. There will be a new rule that all teacher applications for ill-health retirement must be submitted via the LEA and not by the individual teacher, to make sure that the LEA is involved in attempts to rehabilitate the teacher or find an alternative post as early as possible.

There will also be extra pressure on LEAs to find alternative jobs for teachers who have mental breakdowns, not in other schools, but in areas like curriculum development and mentoring. (Since schools became de facto employers it has been impossible for LEAs to shift teachers into quieter posts elsewhere - one reason why ill-health retirements have risen.) Schools and LEAs could do much more to prevent mental health problems among teachers, according to the DfES. It could cite cases like that of Mr M, a 54-year-old former head of careers in a difficult city comprehensive, who was told out of the blue that in future he would have to spend 70 per cent of his time teaching maths to lower sets. He said: "I only had O-level maths. I was offered a half-day course for non-specialists in teaching maths, and I didn't understand most of it. I told the head I couldn't do it and he said I had no choice.

"Basically, I had an emotional collapse. I was just sobbing in school. My GP put me on tranquillisers. I was petrified even to drive past the end of the school road.

"I applied for ill-health retirement, got turned down once, and eventually the county occupational psychologist agreed that I would never teach again."

A better understanding by his school of the causes of his stress would probably have prevented him retiring. But the new government strategy is not just about cutting down the number of retirements, it is also about reducing the pension bill for those who do retire early. Mr M now works as a gardener and handyman. Under the DfES's most radical proposal, still at the consultation stage, his retirement would cost the Teachers' Pension Scheme (TPS) much less, because he is earning a living outside teaching.

Since 1997, when the rules were substantially tightened, teachers have had to prove that they were "permanently incapable" of returning to teaching, even part-time, before they could retire sick. However, having proved this, they were entitled to a full pension, whatever their age. Now, under Treasury pressure, the DfES is arguing that "the future earnings potential of retirees" should be taken into account in any early pension they receive.

Suppose, for example, a 55-year-old teacher with depression, who under the present system would receive a full pension five years early, could instead be shown to be too disabled to teach but perfectly able to work in a supermarket. For five years the TPS would then only have to pay that teacher the difference between the supermarket salary and their pension.

Such a change would affect many retiring teachers, according to Dr T, a consultant psychiatrist who at present does many of the official mental health assessments on teachers who hope to gain ill-health retirement. (He needs to remain anonymous so that no patient can be identified.) He said: "Often you find that teachers have quite severe symptoms, but they are not evident outside the classroom. They may drive to school and be unable to get out of the car. But you wouldn't think, looking at them, that they had a tremendous disability. They may just be affected by children.

For instance, I've had patients who can go to the shops and be fine as long as it's before half-past three and there are no kids around. "I've known headteachers become park attendants, because they can cope with that and they want a quiet life."

Over the past 18 months, Dr T says, he has been aware of downward pressure on ill-health retirement. "There's been nothing official. It's just in the atmosphere. People are turned down more often the first time they apply.

There are more appeals. They are definitely trying to get tough."

Yet teachers' official retirement age is already higher than that for some other stressful professions (see box, above left) and the Government is considering whether to raise it to 65.

The most likely reason why they are trying to get tougher, according to Dr Tony Bowers of Cambridge University, is the time bomb in teacher pensions.

Half the teacher workforce is aged over 45 and due to retire in the next 15 years. DfES calculations show that the teachers' pensions bill will rise in real terms from pound;4.2 billion this year to pound;4.5bn in 2008, pound;5bn in 2013 and pound;5.5bn in 2018.

"Teachers' pensions are just paid for out of revenue," Dr Bowers explains.

"If revenue isn't enough to meet them, then the DfES has to. That's why they slapped up employers' contributions this year, and that must be why they are seeking to stop generous settlements. I expect the teacher pensions people are under great pressure."


Public service:

* Firefighters: 55, or from 50 if served 25 years

* Mental health nurses: 55, provided served 20 years

* Police officers: 55, or from 50 if served 25 years, or after 30 years

* Teachers: 60

* Civil servants: 60

* Nurses: 60


Region per 1,000

North-east 6

North-west 6

Yorks and Humber 7

E Midlands 5

W Midlands 5

East of England 5

London 4

South-east 4

South-west 7

Wales 7

Source: DfES 2001-2

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