Pensions

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Why are teachers opposing changes to pension contributions etc

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Pensions

  1. 1. Working together to defend your pension Thanks to Camden NUT
  2. 2. Our case is very simple • Our pensions are affordable • We agreed cost sharing changes to the scheme in 2006 • These changes are bringing about the desired savings and costs are falling • The government has not carried out a valuation of our scheme • So they have no evidence that these changes are necessary
  3. 3. Pay more, work longer, get less • Up to 50% increase in pension contribution and more • Work to age 68 or more • Pension age linked to state pension age • Move to career average • Change indexation to CPI (lower than RPI)
  4. 4. A pay freeze • Pay has been frozen for the next two years • Institute of Fiscal Studies say government economic policies leading to 10% drop in living standards • Inflation is now over 5% on both CPI and RPI
  5. 5. RPI - CPI The government changed the indexing of our pensions from RPI to CPI in April 2011. CPI is 0.8% a year less than RPI on average. This is a 15% cut to our pension.
  6. 6. Who pays what? Current Scheme Proposed Scheme Employee: 6.4% Employer: 14.1% Employee: 9.5% Employer: 10.5% Total contributions = 20.5% Total contributions = 20.1% Overall contributions have gone down, this gives the lie to the government’s claim that our pension scheme is in crisis. It is a way of teachers subsidising underinvestment in schools.
  7. 7. Accrual rates Pre 2007 scheme Post 2007 scheme • Accrual rates 1/80th • Accrual rates 1/60th • Lump sum 3/80th • No lump sum • Normal pension age 60 • Normal pension age 65 Proposed scheme • Accrual rate 1/65th • No lump sum • Normal pension age 68
  8. 8. An example Teacher works for 30 years and retires at 63 on the average retirement salary of £37,900. Pre-2007 scheme Post-2007 scheme Proposed scheme Annual pension £14,212 Annual pension Annual pension £17,054 £13,119 Lump sum £42,637 No lump sum No lump sum
  9. 9. Career average vs final salary • The government have said they will move us to a career average scheme. • Everyone loses. Classroom teacher Senior teacher Headteacher -5% -20% -35%

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