PENSIONS: Raising retirement age means young teachers will get 19% less
Younger teachers have been dismayed to discover that they could receive substantially smaller pensions than they were expecting, thanks to government plans to raise the retirement age. "I stand to lose 15 per cent of my pension if I retire at 60, as I was planning," says Iain Freeland, a 29-year-old who is head of science at Bradford Challenge college.
"This is not what I had in mind when I opted to join the Teachers' Pension Scheme. Teachers have always regarded the good pension as deferred salary.
It is one of our few perks."
Actuarial calculations reveal that under the Government's new plans, 25-year-old teachers who joined the scheme this year could lose nearly a fifth of their pension if they retire at 60.
As the Association of Teachers and Lecturers points out, funding for teachers' pensions has always taken account of increased longevity. It says that 0.4 per cent of the increase in the employers' contributions, from 8.35 per cent to 13.5 per cent in April 2003, was specifically to pay for this.
The union is also concerned that late entrants to the profession will stand little chance of building up a decent pension, and that new teachers already burdened with student loans will be deterred from joining the scheme.
The union has accused the Government of attempting to divide and rule the teaching force through its policy of raising the pension age for all teachers aged under 50 on September 1 last year. "The most dramatic effect will be on younger teachers, yet they don't always have the experience of the pension scheme to realise what they're missing," says Sue Johnson, head of pensions at ATL, one of the most active campaigners against the changes.
Ms Johnson says that an information leaflet from the Department for Education and Skills fails to make clear how much younger teachers stand to lose. The leaflet, which is going out to teachers with their annual pension statements, gives illustrations only of the pension reductions faced by older teachers. It says that teachers now in their fifties will lose nothing if they retire at 60, while those who reach 60 in 2014 will miss out on less than 1 per cent of the pension they were expecting. Teachers who turn 60 in 2023 will only lose 7 per cent if they retire in that year, according to the DfES.
Under the new system, all teachers under 50 today who retire before the new pension age of 65 will suffer actuarial reductions to the benefits they earn after 2013. From 2010, 55 will be the earliest retirement age because of changes to Inland Revenue rules. The leaflet says that one of the main reasons for raising the pension age is "the fact that many people want to work longer and build up higher pensions".
Ms Johnson criticises this as disingenuous. "The latest figures do not show that teachers have a desire to carry on until they are 65. They want a quality retirement." During 20002-2003, just over 50 per cent of teachers retired before they were 60.
A spokesman for the DfES says: "The examples in the leaflet are merely illustrative and should not be used for calculating individual pensions, particularly those which would not be payable for many years. It would be inaccurate to estimate projections until details of the modernised TPS are known."
Meanwhile, 20 public service unions have launched a campaign which opposes the rise in the pension age. The unions are urging teachers and other public servants to lobby their MPs about the proposed changes.
The TUC is holding a pensions rally in Trafalgar Square on June 19: www.tuc.org.ukpensionsrally See pensions details on your union's website.
WHAT IT MEANS
* Twenty-five-year-old teachers joining the pension scheme now would accumulate nine years of benefits under the old pension rules (2004-2013) and 26 years under the new rules if they retired at 60. They could lose 19 per cent of the pension they would have gained under today's system.
* Thirty-five-year-old teachers who joined the scheme 10 years ago would earn 19 years' benefits under the old pension scheme and 16 years under the new rules if they took their pension at 60. They could forfeit 11 per cent of the pension they'd have gained under the current system.
These illustrations take no account of possible improvements to the TPS which may be introduced alongside the higher pension age. With thanks to RSM Robson Rhodes: 0161 455 3318.