Planned pension reforms are calling time on early retirement, writes Susannah Kirkman
Plans to raise the pension age to 65 for teachers and other public service workers dampened the Christmas spirit in many staffrooms and cast the Government in the role of Scrooge. The ghost of pensions yet to come cast an added gloom in the light of the latest statistics, which show that 50 per cent of teachers currently retire before 60.
Teaching unions are dismayed by the implications of the proposals, which were announced in the pensions Green Paper published in the last week of the Christmas term. Under the new rules, which could be brought in as early as 2005, new entrants will not receive a full pension unless they work until 65. Some teachers already in the pension scheme may also have to remain in work until they are 65 to qualify for full pension benefits, although it is unclear when this might be introduced.
While union officials say the proposals are unlikely to affect anyone currently in their late fifties, they fear the plans will rob teachers of one of the few incentives for joining or staying in the profession - the pension scheme.
"No one expects to get rich teaching, but one of the benefits is a decent pension," says Susan Johnson, head of pensions at the Association of Teachers and Lecturers."The Government could not have done more to demotivate the profession. It's like having five years added to a life sentence."
Brian Clegg, assistant secretary for salaries and pensions at the National Association of Schoolmasters Union of Women Teachers, says: "It's a work-until-you-drop Green Paper. The changes are being dressed up as increased flexibility for employees, but teachers will be handcuffed to the job for an extra five years."
The Government argues that reforms are urgently needed; increased life expectancy means pension schemes will run out of money if people don't pay more. The Green Paper also says many people want to work longer and build up their pensions. But this does not ring true for teachers. Despite the tightening of the retirement rules in 1997, an increasing number of teachers are choosing to sacrifice a reasonable retirement income for the chance to leave the classroom in their fifties. The most recent figures show that, although few took early retirement with actuarially reduced benefits when the scheme was introduced in 2000, the number has since escalated.
The unions are particularly concerned by the flood of teachers who forfeit up to a quarter of their retirement benefits by taking an actuarially reduced pension from the age of 55. "Teachers are increasingly saying it's a young person's profession; they no longer feel they have the physical capacity to do the job," says Susan Johnson.
Yet the Government is proposing to raise the earliest age at which teachers can draw their pension from 50 to 55 in 2010. Under the new system, anyone who still chooses to retire at 55 could find their benefits slashed by around 50 per cent.
Tom Sanders, who teaches at St Michael's CE middle school, Wimborne,Dorset, says the changes will provoke enormous resentment. He understands that new entrants might have to work until 65 to boost pension funds, but insists that changing conditions for serving teachers would be unfair.
Mr Sanders, who regularly works until 6pm or 7pm, says: "People have structured their careers and work patterns believing they will stop at 60. The Government can't expect to cut teachers' pensions and keep their goodwill." Mr Sanders, 51, had been planning to quit at 58 and to take his pension and additional voluntary contributions at 60. But if the Government decides to make serving teachers work longer for their pensions, those such as Mr Sanders will have to wait longer for their AVCs, too.
The unions insist that, if ministers expect teachers to work for longer, the Department for Education and Skills will have to make it easier for people to work more flexibly as retirement approaches. Mike Beard, a pensions adviser at the National Association of Head Teachers, says: "At the moment, people are diving out early because they're desperate. We need a wind-down to retirement."
The NAHT would like to see a system whereby teachers could take some of their pension while continuing to work part-time, similar to a scheme in the Netherlands and Germany. The association believes many teachers would support the idea, as many who take early retirement are happy to boost their incomes by doing supply work.
All the unions are in favour of improving the stepping-down process, which allows staff approaching retirement to take a post with less responsibility while protecting their pensions. The DfES says stepping-down has to be initiated by employers, many of whom have been unwilling to allow it.
On the plus side, the Government says savings gained from raising the pension age will be used to improve the scheme. Reforms for which the unions have been campaigning for years could be introduced.
More generous pensions are top of the unions' list of recommendations to the DfES; they say the teachers' scheme should be changed in line with civil service arrangements. Civil service pensions are calculated by dividing the years of service by 60, not by 80, which is the figure used in the teachers' scheme. This would mean a substantial rise in pension income.
Other union proposals include benefits for unmarried partners, more generous payments for families of teachers who die in service and more leeway for teachers who return to work after they have retired; at present, teachers who earn over a certain limit may have their pensions cut or suspended.
One option may be a voluntary arrangement, allowing teachers to switch to the new scheme in exchange for improved benefits.
But with the stress of classroom life showing little sign of abating, many teachers may believe the advantages of an improved pension scheme are far outweighed by the burden of continuing to work when they feel too exhausted to carry on.
Pensions Green Paper: Public Service Pension Age, see: www.teachernet.gov.uk Education_OverviewbriefingPensions
Of teachers who retired in the financial year 2001 to 2002:
* 46 per cent were 60 or over;
* 18.8 per cent took premature retirement, with their employers' consent and enhanced pension benefits;
* 19.7 per cent took ill-health retirement;
* 15.5 per cent retired aged 55 or over with actuarially reduced benefits.
What will change?
* If the proposals are implemented, all new entrants after about 2005 will have to work until 65 to gain full pension benefits. The Government has yet to set a date for the change, but it is likely to be before December 2006, when a European directive will make compulsory retirement ages unlawful for most employees.
* Service up to the date when the changes are introduced will be protected. So if you have built up a pension which will be worth pound;8,000 a year on retirement at 60, you will still be entitled to this.
* There will be consultation on when and how the higher pension age will apply to existing employees. Transitional arrangements for those already in the scheme are likely, so someone now aged 45 might be expected to work until 62.
* Teachers will still be able to retire before 65, but those who take their pensions early will receive reduced benefits, unless they are granted premature retirement by their employers.
* Teachers returning from a career break or changing employers will remain within the existing scheme.
* Ill-health retirement will be unaffected.