Pensions hit by pay-offs

9th February 1996 at 00:00
The rapidly rising number of teachers taking early retirement, particularly through ill health, is imposing mounting "financial strains" on the Scottish Teachers' Superannuation Scheme, the National Audit Office has warned.

A report from the Comptroller and Auditor General, who certifies the accounts of all Government departments, revealed this week that the pension fund incurred costs in 1994-95 of pound;280 million, some pound;87 million greater than receipts. Sir John Bourn said that the shortfall of pound;207 million identified by the Government actuary in 1986 would not be cleared as planned if such a rate of depletion continued.

Contributions by employers, which were increased to 8 per cent of salaries in 1989 to pay off the deficit, were no longer adequate, Sir John said. The Government actuary, who is carrying out another review of the scheme, is now likely to recommend a "substantial increase". Teachers and lecturers currently contribute 6 per cent of their salaries.

The report reveals that the number of early retirements rose by 48 per cent in the 10 years to 1995, from 1,056 to 1,564. Retirements due to ill health rose by three-quarters, from 237 to 416, with the cost of pension enhancements borne by the superannuation scheme.

The Scottish Office Pensions Agency, which runs the scheme, will study the report before deciding whether teachers and education authorities as well as lecturers and their employers in colleges and universities should bear a greater share of the costs of "burn-out", which the unions claim is the cause of most retirements on medical grounds.

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