Pensions will cost teachers 50% more

14th January 2011 at 00:00
That's an average increase of pound;100 a month

A radical overhaul of the teacher pension scheme that will see individual contributions soar by 50 per cent is to be pushed through within a month, The TES can reveal.

The Department for Education has revealed that contributions will rise from a current flat rate of 6.4 per cent of salary to an average of between 9.5 and 9.8 per cent by 201415, prompting outrage from teaching unions, which are holding emergency meetings.

The announcement, which will save the Government pound;768 million to pound;852 million a year, is the first time the hike in teacher contributions has been set out in detail.

Overall annual spending on public sector pensions is being reined in by pound;2.8 billion.

For a teacher earning pound;35,000 a year, contributions are set to soar by up to pound;1,190 a year - pound;100 a month. The increases will be phased in over three years from April 2012.

The move comes on top of a two-year pay freeze from September this year, and the controversial switch from calculating pension payouts from the Retail Price Index to the generally lower Consumer Price Index.

Teachers' leaders say the announcement on extra contributions is "politically motivated", coming before the outcome of the independent John Hutton review of public sector pensions, due in March.

Unions held emergency meetings on Monday to decide on their next course of action, with widespread industrial action a strong possibility.

Minsters this week invited unions and employers to discuss how to impose the contribution rise, which is likely to result in the highest-earning teachers paying a higher percentage of their earnings so that lower paid workers are not unfairly hit.

In a letter to the Teachers' Superannuation Committee, a cross-union group devoted to pensions, the DfE's head of pay and pensions, Paul Bleasdale, wrote that there would have to be a "tiered approach" to contributions to "strike the right balance between fairness, ease of understanding and administrative complexity".

But unions say a deadline of mid-February to finalise the details is unrealistic and motivated by the Government's desire to announce savings on Budget day on 23 March. Chancellor George Osborne said in the comprehensive spending review in October that he expected all public sector pensions to rise by an average of 3 per cent.

Chris Keates, general secretary of the NASUWT, warned that pensions will be the issue that unites unions in taking action. She said: "Teachers will be deeply aggrieved about the coalition Government continuing to wage war on their pensions, when changes had already been agreed with the previous government, which, according to the Treasury itself, made the scheme affordable and viable in the longer term."

Not knowing the "full context" of the situation, including the outcome of the Hutton review, which will address issues such as the final salary scheme, would make it "very difficult indeed" to engage with the Government in such a short time frame.

Martin Freedman, head of pay and pensions at education union the ATL, said: "The Government wants to get this out of the way before the Budget, presumably so George Osborne can say we have made X amount of savings in public sector pensions. It's completely political.

"This announcement will inevitably speed up any union action to take over pensions."

The DfE said the union outrage was premature and that ministers were keen to sit down and talk.

A Department spokesman said: "We wrote to employer groups and teaching unions, so we can work with them to look at options for how the changes could be introduced fairly and progressively from 201213 onwards, and whether high earners should pay proportionately more, while protecting the lower-paid members of the pension scheme from the full effect of the contribution increase."

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