Ministers act to stem tide of early retirements

1st November 1996 at 00:00
Ministers hope the number of schoolteachers taking early retirement will fall by nearly half by the year 2000 as a result of pension changes announced last week.

This assumption, described as "heroic" by local authority employers this week, is based on the proposed switch of the extra cost of early retirement from central government to local education authorities, colleges and schools.

The Government has been prompted to act by fears of a teacher shortage, at a time when pupil numbers are rising, and by the spiralling cost to government of the current early retirement arrangements.

Nearly 100,000 schoolteachers have either taken early retirement or resigned through ill health since 1989, more than three times the number who left at the normal retiring age of 60 or over. Compensation payments for premature retirement are currently costing Pounds 150m a year.

Ministers hope the new arrangements, under which employers will acquire a long-term commitment to pay part of the pension of staff retiring early, will discourage councils from offering extra payments - and that hard-pressed schools will be unwilling to pick up the tab.

For further education colleges, which will also be taking on part of the cost of early retirements, the changes come as the second of two pensions blows this year. Many are being badly hit by increases introduced last April in employer contributions to the Local Government Superannuation Scheme, to which most college support staff belong.

The changes to the teachers' scheme will effectively put an end to early retirement for lecturers, colleges predict. As the sector faces an ever tighter cash squeeze, colleges may also opt increasingly to farm out teaching to agencies in order to off-load pensions responsibility.

Announcing consultation on the package of reforms, due to take effect next April, schools minister Cheryl Gillan said: "We have been losing too many experienced, high-quality schoolteachers through premature retirement in recent years. The reforms should reduce premature retirements in schools, will allow schools to retain more of their experienced teachers, and in turn it will reduce the demands on the teacher training system."

At the same time as discouraging early retirement of older teachers, the reforms will encourage the dismissal of incompetent younger ones. From next April, local authorities will be able to offer severance payments up to a limit of 66 weeks' pay, compared with the current limit of 30 weeks, thus bringing teachers in line with LEA officers.

The Government also plans to close two loopholes in ill-health arrangements. Teachers on an ill-health retirement pension will no longer be allowed to work as teachers and teachers who have been barred for misconduct will no longer be eligible for an ill-health retirement pension.The death grant paid to relatives of teachers is to be doubled, from one year's salary to two, from April 1998.

Last November, Parliament's financial watchdog warned that the soaring number of early retirements (up 68 per cent over the decade) was sending the Teachers' Superannuation Scheme into debt. Sir John Bourne, the controller and auditor general, expressed concern at the strain being placed on the scheme and proposed an increase in the employers' contribution.

Instead of doing that, the Government is to reduce the employers' contribution (from 8.05 per cent to 7.2 per cent ) and, in Cheryl Gillan's words, "release funds so that employers can pay directly for those premature retirements that they believe to be necessary".

The Government is also proposing to accept recommendations for reforming the funding of the pension scheme to provide realistic rates of investment return.

The National Union of Teachers said it would not help schools to keep on teachers who were becoming increasingly stressed. The number of schoolteachers retiring through ill health has risen from 4,200 to 6,100 since 1989, with an increasing number citing stress.

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