Change to pensions pot will be viewed as pay cut, unions warn

27th August 2010 at 01:00
Teachers' bodies have warned the Hutton Commission, charged with reviewing public service pensions, that any change to their retirement pot will be viewed as a wage cut.

They say pensions should be seen as deferred pay for teachers, in recognition of the sensitive, important and sometimes dangerous tasks undertaken by public servants.

Teaching unions believe people do the job because of their commitment to young people's education, despite better-paid careers being available. But, they add, the teachers' pension scheme is part of the attraction of the job and any cut would damage recruitment and retention.

The submission comes from the teachers' side of the teachers' superannuation working party in evidence to the independent public service pensions commission, set up by the UK coalition Government.

The unions say the agreement reached in 2006 - which raised the retirement age from 60 to 65 for new entrants - meant teachers' pensions were financially viable and sustainable for the long term.

It urges the commission to take into account the impact of the rise in the number of members with a pension age of 65, a measure that will lead to a lessening in the per-member costs of public service pensions.

The climate of debate around pensions is described as "poisonous", with teachers criticising Deputy PM Nick Clegg, when he said: "Can we really ask private-sector workers to keep paying their taxes into unreformed gold-plated pension pots?"

In fact, the average teacher pension is less than pound;10,000 a year and fewer than 1 per cent are for more than pound;30,000 a year. With a rising number of older entrants and thus shorter service, the value of the average pension has fallen in real terms by 4 per cent over a 10-year period.

The pension scheme is partly compensation for the fact that teachers' starting pay is below the average for graduate professions and that their average pay progression is slower than for graduates elsewhere, argues the submission.

Teachers' representatives say not only does the problem with UK pension provision lie with failures in the private sector, but that critics of public sector pension schemes are mistakenly calculating their liabilities on the same assumptions that are used for private schemes.

They say government plans to switch indexation from RPI (retail price index) to CPI (consumer price index) for public sector pensions will have major long-term implications. Assuming an RPI of 3 per cent and CPI of 2.33 per cent a year, the switch will cost a public service worker with a pound;10,000 pension (the teacher average) more than pound;30,000 over the course of a 25-year retirement, the unions warn.

Elizabeth Buie

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