Teachers 'can't afford' to pay into pensions

'Worrying' finding comes from pay review body, which says that teachers opt-out of pensions because they 'need every penny'

The STRB report warned about teachers opting out of the Teachers' Pension Scheme because of the cost of living.

Teachers are opting out of the Teachers’ Pension Scheme because they cannot afford the contributions, the government's teacher pay advisory body has warned.

In one London borough, all the newly-qualified teachers that the School Teachers' Review Body (STRB) spoke to as it gathered evidence for today's pay deal said they had stopped paying into their pension. 

A teaching union leader has described the development as "very worrying". 

The news has raised fresh concerns about the challenge of keeping teachers in the profession amid a continuing recruitment and retention crisis.


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In its report, published today, the STRB says: “Our visits brought to light the issue of teachers opting out of the pension scheme as they could not afford contributions alongside rent and student loan repayments.

“This appeared to be a particular issue in London and the South East.

“For example, all of the NQTs we spoke to in Tower Hamlets said that they had opted out of the Teachers’ Pension Scheme, with one telling us this was because they ‘needed every penny’ to afford to live in the area.”

The news will increase concerns raised in 2016, when the number of teachers opting out of the scheme between April and June increased by 19 per cent compared to the same period in 2015.

Education secretary Damian Hinds has previously highlighted pensions as a key benefit of being a teacher, describing it as “one of the most generous pension schemes in the country”, offering a typical teacher around £7,000 in employer contributions every year.

STRB members visited 20 schools and two initial teacher training providers as they gathered evidence for their 2019-2020 pay award recommendation.

Kevin Courtney, joint-general secretary of the NEU teaching union, told Tes that today’s warning from the STRB was “very worrying.”

He said: “When you add up pension contributions along with national insurance and student loan payments, it comes to more than 50 per cent of your salary.

“In inner London, the housing market can be very steep, which puts you in a position where your disposable income can be very low, so this is one way of freeing up money.

“But it’s bad for retention because the teachers’ pension scheme is a good mechanism for teachers staying in the profession.”

Mr Courtney said the union compiled its own figures of teachers leaving the pension scheme on a monthly basis and said they were not as bad as the situation outlined in Tower Hamlets in the STRB report.

A Department for Education spokesperson said: “Teachers are free to opt out of the Teachers’ Pension Scheme.

"The scheme is, quite rightly, one of the most generous pension schemes in the country and provides inflation-proof benefits for school teachers.

"We introduced a tiered contribution structure so new teachers pay the lowest contribution rates. If a teacher chooses to leave, they can re-enter the scheme at a later date.

“To illustrate how this scheme compares to others available: a teacher who joins the pension scheme at 23 and follows a typical full career path could expect to accrue a pensions product worth around £600,000 – that’s £20,000 a year – and the average classroom teacher will benefit from at around £7,000 a year in pension contributions from their employer on top of their salary.”

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