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Too exhausted to carry on in post?

Susannah Kirkman reports on the options that may be offered to teachers and lecturers now that generous early-retirement packages are a thing of the past. Early retirement on full pension has gone forever, eliminated by escalating costs and the growing shortage of teachers.

The writing was already on the wall last April, when Michael Bichard, permanent secretary for the Department for Education and Employment, told the Committee of Public Accounts that the Government was thinking of asking the employers to foot the bill for early retirement. But what options will be left to teachers who are too exhausted to carry on?

More flexible, imaginative work patterns could be part of the solution for burnt-out teachers, according to the teaching unions and the employers. Job-sharing and part-time work might now become acceptable for older teachers, as well as for younger women with families.

All sides would like to see greater flexibility for "stepping-down" arrangements, an existing scheme which allows older staff to relinquish their responsibilities and return to the classroom for the last few years of their careers. The National Association of Head Teachers has noticed a surge of interest in this option among their members.

At present, stepping-down is virtually unheard of, as teachers have to stay within the same local authority or even school, if it is grant-maintained. The reincarnation of the former head as a lowly classroom teacher could be a considerable embarrassment for the rest of the staff and the governing body. Unions and employers would like to see the system extended so that teachers could take a post with less responsibility in a different LEA.

"This would allow teachers to move to a different area of the country in readiness for retirement," explained Mike Beard, head of pensions at the NAHT. "It would avoid the costs of early retirement, but pensions would be protected too. Teachers couldn't lose."

Under current stepping-down arrangements, a deputy head with 25 years' experience who returns to the classroom would have most of her pension based on her deputy head's salary. And if her salary as a classroom teacher eventually exceeded her salary as a deputy head, all her pension would be at the higher rate.

Stepping-down could also be modified to include part-time work and job-sharing, suggests the NAHT. Another option already adopted by companies such as Littlewoods and Iceland could be phased-in retirement, where an employee gradually reduces the number of hours worked during the last year or so before retirement. This doesn't affect the final pension but is less expensive for the employer than early retirement; someone working four days a week, for instance, receives a commensurate salary plus a fifth of their pension.

"Greater flexibility would get rid of the stark choice of retirement," said David Whitbread, head of education at the Local Government Association. "Health problems, for instance, might be related to the stress of the job and would improve with a reduction in responsibility." The employers would also like to see some sort of co-ordinated redeployment, so that a jaded head of department could be offered a job as a classroom teacher at another school with a suitable vacancy.

But giving up responsibilities would involve a very delicate negotiating process. Governors might decide, for example, that a teacher should stay. Local authorities are also reluctant to allow stepping down as an entitlement, in case it causes a mass exodus from posts of responsibility.

To the unions' dismay, the introduction of actuarily-reduced pensions for those teachers choosing to take early retirement now seems inevitable (see article on Guernsey scheme, opposite). Teachers are now the last group in the public sector whose pensions are not automatically reduced if they retire early.

If their pensions are brought into line with those of civil servants', they will be massively reduced; a male civil servant receives a pension reduced by 45 per cent if he retires at 50. Yet one advantage could be that teachers will now be able to choose early retirement, albeit on reduced terms, instead of needing employers' consent.

Until this year, a 50-year-old teacher earning Pounds 22,000, and with 25 years' service, could retire with a pension of Pounds 6,785 and a lump sum of Pounds 20,625. The Association of Teachers and Lecturers, however, estimates that, if the new system of actuarily reduced pensions is introduced, the same teacher might get a pension of only Pounds 3,856 and a lump sum of Pounds 14,334.

The ATL believes part of the employers' contributions should be earmarked to fund early retirement. While teachers may find voluntary retirement an attractive option, they will not want their pensions to suffer, according to Sue Johnson, head of pensions at the ATL.

The National Union of Schoolmasters Union of Women Teachers insists that, if teachers are effectively made redundant, they should have a full pension, not an actuarily-reduced one.

Brian Clegg, the union's assistant secretary for salaries and pensions, says: "The superannuation system guarantees a full pension. Teachers will ask why they have been paying contributions all these years to find nothing left when they need it."

At present, it seems likely that employers who want a teacher to go will have three options. They could pay the full pension, without enhancement, so that a teacher would receive a pension based on their years of service. Another alternative would be to make a one-off severance payment. A third choice would be a statutory redundancy payment, but only if the post is to remain empty. The terms could also vary hugely, from a maximum Pounds 6,300 redundancy payment for more than 20 years' service, to Pounds 27,000 maximum severance for someone on salary point 9, under new rates to be introduced next month.

The increase in discretionary severance pay will bring it in line with payments for other local government employees, but it is doubtful whether many LEAs will be able to afford to follow the new guidelines.

"An enhanced severance payment is a huge amount for an LEA to find all at once," said Mike Beard. "If it's a choice between severance and early retirement, I guess the employer will pick the cheapest option." Local authorities are adamant that, whichever route to early retirement is chosen, they would like the cost to be more fairly distributed among the different education sectors.

At present, the cost of employers' pension contributions is averaged out across the education service, although the proportion of early retirements is far higher among staff at FE colleges, grant-maintained schools and voluntary-aided schools, says David Whitbread. While 1.6 per cent of primary teachers took early retirement in the 1994-1995 academic year, 3.3 per cent of FE staff retired early over the same period.

Local authorities are proposing that employers in sectors with high early retirement rates should make higher pension contributions.

Brian Clegg proposes a more fundamental change to the funding of teachers' pensions. He believes that the Government should hand over the "notional" superannuation fund, with assets worth an estimated Pounds 75 billion, and allow it to be invested on the open market.

"If the superannuation fund had been properly invested, there would be no problem in meeting the demands on it now," he said.

On a more prosaic level, the NASUWT is suggesting that Additional Voluntary Contributions should be more flexible; currently, AVC funds cannot be touched until the official retirement age.

Meanwhile, the Funding Agency for Schools has cut through a lot of the confusion and anxiety surrounding future retirement policies by making one simple rule; teachers aged 53 and over can continue to take early retirement on the old terms. The unions are complaining that the scheme is unfair to teachers in LEA schools, but the reasoning behind it is clear. A survey of staff in GM schools showed that 25 per cent of those retiring early were aged 50 to 52, therefore, large savings could be made by simply restricting early retirement to those over 52.

Perhaps the education service also has something to learn from local government, which from April 1998, will apply the crisp "85 rule"; any employee whose age and length of service total 85 or above will qualify for a full pension instead of an actuarily-reduced one.

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