New teachers will get bigger pensions to compensate for them having to work longer, under a final deal agreed between unions and the Government this week.

All teachers will have to pay more into the pension scheme as part of a deal which gives protection to existing members and greater flexibility for all teachers.

Existing teachers and those who join the scheme before the end of 2006 will be able to retire at 60 without having their pension reduced.

Those who join later will be expected to work until 65 for a full pension.

However, the amount of pension they are entitled to will increase, allowing them to retire at 62.5 years on a similar deal to that which existing teachers will get at 60.

Unions were unanimous in praising the deal which builds on an interim agreement reached in October.

They have also won protection for thousands of senior teachers close to retirement age who would have lost out because their pay is due to be cut when management allowances are replaced with teaching and learning responsibility payments.

Teachers who have their pay reduced in the final decade before retirement will be paid a pension based on the higher salary level.

The Government said the agreement would reduce the long-term costs of the Teachers’ Pension Scheme by pound;5.4 billion. It has argued changes were necessary to prevent costs spiralling as a result of improved life expectancy.

Pension contributions will increase from the current 6 per cent to 6.4 per cent from 2007. A teacher at the top of the main scale will pay an extra pound;115 per year and a newly-qualified teacher pound;79. Employers’ contributions will increase from 13.5 per cent to 14.1 per cent.

Unions highlighted improvements and increased flexibility offered to new and existing teachers including:

* opportunities for phased retirement;

* unmarried partners to be given the same benefits as those who are married;

* the option to take up to 25 per cent of pension benefits as a tax-free lump sum compared to the current fixed payment of 13 per cent.

Steve Sinnott, general secretary of the National Union of Teachers, said:

“These changes will improve, maintain and protect one of the best occupational pension schemes in the UK.”

John Dunford, general secretary of the Association of School and College Leaders, said: “This represents a seriously good deal for teachers. It will help schools and colleges to retain teachers and will also benefit those who wish to plan their savings so that they can retire between 55 and 60.”

First Class, Adaptable, Sustainable - Teachers’ Pension Scheme England and Wales: Consultation is available from http:www.dfes.gov.ukconsultations * jon.slater@tes.co.uk