Last week, Lord Agnew didn’t do himself any favours. He told independent school leaders that “the state-school teachers, they don’t recognise that they’re getting a 42 per cent increase in pensions contributions” and “they don’t say, 'How wonderful – the state is really looking after us' ”.
The reports in the press dwelt on the patronising criticism of teachers for not knowing of the greater input from employers, while union leaders pointed out that even though employers were paying more in, teachers would not be getting any more out.
In reality, the pensions situation is much more complex than the government, the media and even the unions say it is. The fact is this: those of us in work are less well-off than we were five years ago, and the calculations on which pensions are based will result in a lower sum comparatively for those retiring now and in the future.
Teachers paying more than ever into pensions
It escaped Lord Agnew’s notice – it shouldn’t have, but it did – but teachers are already paying more than ever in terms of national insurance and pension contributions from their salaries. According to the NEU, in 2015 teachers’ pension contribution rate was raised to 9.6 per cent – an increase of 50 per cent since April 2012. Teachers will not get any enhanced benefits for this additional outlay.
And now there are arrangements in place that mean younger teachers will receive monthly payments based on their career average, rather than a final salary, once they retire. Understandably, it’s difficult for my younger colleagues to be grateful for a deal which is likely to be less beneficial than that of their older peers.
The ruthless move to raise the pensionable age from 65 to 68 in line with the national arrangement means that teachers are working longer for less. Realistically, given the strenuous demands of the job and ageist practice in many areas, how many teachers will even still be in the classroom in their late 60s? Will they take early retirement and then find other work to make ends meet?
To add further insult to injury, the salary that used to be attractive, thanks to its stability – particularly in times of high graduate unemployment – has been deeply eroded. Since 2008 and the years of austerity, many teachers have not seen any pay rise for a number of years – some haven’t even seen the much vaunted 3.5 per cent pay rise from this year.
And if that salary has been eroded then, obviously, the pension will be worth a lot less as well. Pensions are deferred pay, set aside for the future to support teachers in their retirement – they are not a magical windfall that mysteriously materialises at the point of retirement. They are a salary sacrifice made in good faith by teachers. It seems more and more that this good faith was misplaced. Given the number of changes we’ve already seen, even the most optimistic of teachers should be worried about more detrimental reform before our younger recruits retire.
The effects of increased employer contributions
Lord Agnew is right about one thing, at least: the fact that employers are contributing £700 million a year to pension funds is concerning. These employers are our already-struggling schools: ones that can barely afford loo roll and glue sticks. Teachers will become too expensive, especially those with more experience further up the pay scales.
Why is this? Well, it’s thanks to an ‘80s initiative called Local Management of Schools. It allows central and regional government to shrug off on to headteachers the financial responsibility that had been once been in their remit. When individual school heads are given their budget for the year, it includes staff salaries. And therefore, heads find themselves unable to recruit the more experienced teachers because they can’t afford them.
Redundancies and further salary cuts for the already-employed teachers also seem inevitable. There are likely to be even fewer performance-related pay bonuses, especially in the lower ranks of the profession, and increased class sizes – or more classes being taught by teaching assistants.
Teachers, employers and pupils are all losers in this situation.
It’s a bleak picture.
Is there anything to be done?
There is a winner in the scenario? You guessed it – the Treasury. They’ve retained money that ought to have been paid out in cost-of-living increases in times of austerity and is to be augmented not just by the increases in teacher contributions since 2015 but the extra levy on employers.
The figures provided by the NEU show that since 1923 (when the Teachers' Pension Scheme was set up) more than £56 billion in contributions has been paid into the scheme than has been paid out in pensions. Something about having cake and eating it comes to mind…?
Education is a national service. Teachers’ salaries must be funded centrally so that school leaders don’t have to slash provision for children in their care to balance the books when it comes to pension contributions.
Lord Agnew’s remarks could have been more carefully considered and better expressed. Teachers are all too aware of the consequences of squeezed public spending on schools. And when their long-term and short-term livelihoods, their working conditions and the life chances of their pupils are at stake, teachers' anger is more than justifiable.
What we should all be working towards is getting the state to shoulder its responsibilities and fund schools properly. The state should ensure that the pay and deferred pay in the form of pensions – which form a significant part of the psychological and financial contract – are attractive enough to recruit and retain high-quality professionals well into the future.
Yvonne Williams is head of English and drama at a school in the south of England