Sharing views, information and resources for school staff, trade unionists and education campaigners
Tuesday, 3 January 2012
Total Cost of the Government's Attack on Teachers' Pensions
Steve Cushion, of the London Retired Members’ Branch of the UCU has circulated the following calculations to outline how badly we would be hit if unions accepted the Government's 'offer':
If we were to accept the government's latest offer on "reform" of the Teachers' Pension Scheme, the average scheme member would be £93,000 worse off, while a teacher with 40 years service would be nearly £200,000 out of pocket.
The increased contribution from 6.4% to 9.6%, an average annual contribution increase of £1239, would leave the average teacher £18,500 worse off after 15 years of service. Meanwhile the employers' contribution remains capped at 14%. The maximum contributory service of 40 years would result in increased contributions of £50,000.
As a result of the proposed increase in normal pension age from 65 to 68, the average member would lose three years pension at £11,759 per year. This would leave a lecturer retiring after the average service of 15 years £35,000 worse off, while one retiring after the maximum pensionable service of 40 years would be £90,000 worse off.
As a result of the proposed change from Final Salary to Career Average (CARE), a lecturer retiring after the average service of 15 years would be £22,000 worse off, while one retiring after the maximum pensionable service of 40 years would be £3,000 worse off . This proposal is based on adding together 1/57th of each years' actual salary, enhanced by the Consumer Price Index (CPI) with an additional 1.6% as opposed to the current system of taking 1/60th of the final salary. It does not affect very long service members as badly as those under 30 year's service, but everyone loses.
It is perfectly possible to negotiate a CARE scheme that does not result in members losing money, it all depends on the accrual rate. In order to achieve the current average pension of £11,759, based on the current average salary of £38,737 after 15 years of service, the accrual factor would have to be at least 1/50.
The change from RPI to CPI in the calculation of the indexation of pensions is not compensated the addition of 1.6% to CPI. This leaves all pensioners, including current pensioners worse off. Thus the average lecturer retiring after 15 years' service would be £18,500 worse off, while one retiring after the maximum pensionable service of 40 years would be £54,650 worse off. This applies to current as well as future pensioners and so retired members should be included in any ballot on acceptance or rejection of the government's so-called reforms.
The full calculations are available at
"Any increase in contributions from members will not aid their retirement; they will raise funds for the Treasury. This is simply a tax on public sector workers".
Labels: November 30, Pensions
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