Scheme will allow phased retirement
The scheme is one of the ideas from the department for countering the widely-expressed fears that schools will suffer if heads and other staff denied early retirement are forced to stay in jobs that have become too much for them.
The step-down scheme would extend existing arrangements, which are rarely used because they only apply where teachers are asked to take lower-paid jobs in the interests of the service, such as following a school closure.
And they can only be used at present if the new post is with the same employer. The aim of the new proposals is to turn the existing scheme into an effective replacement for early retirement.
The scheme effectively gives the teacher two pensions, one calculated on service before stepdown, the other on the following years. A head with say, 30 years' service, who went back to the classroom for a further 10 years, would end up with two-thirds of her or his pension based on the last three years as a head, and the other third determined by the final three years as a class teacher.
If, although unlikely, a former head climbs back up the promotion ladder and ends up earning more than ever, the whole pension is based on the final three years.
The DFEE has told the unions and employers that it wants to discuss with them revised and improved stepping-down arrangements "so that teachers in positions of responsibility may give up those responsibilities as they approach the end of their career without adverse effects on their pension".
Michael Beard, pension expert at the National Association of Head Teachers, said that to be of any use stepping down would have to allow teachers to move outside their own employing authority - particularly in the case of grant-maintained schools, where the school was the employer.
The DFEE also wants the consultation to include the possibility of offering teachers early retirement on an actuarially reduced pension, which would take account of the fact that the pensions were being drawn before the contributions had, as it were, earned their full interest. Another of its ideas is introducing variable contribution rates for different parts of the pension scheme.
Meanwhile, employers are to be allowed to make enhanced severance payments of up to 66 weeks' pay to teachers who have not been granted premature retirement.
The payments, which can be made from April 1, are two weeks' pay for every year of service for teachers aged 21 to 41, and a further three weeks for those over 41.
NAHT headquarters reported a surge of inquiries following the Education Secretary's decision to put back the early retirement deadline. The union's salaries chief, Kerry George, said it looked as if the postponement could worsen the prospect of a recruitment crisis.
"My guess is that many heads who could not face the idea of walking out in the middle of the school year will feel differently about leaving at its end, " she said.