Transcript Pension Scheme (NITPS) - Ulster Teachers` Union

Teachers’ Pensions
Under Attack!
Pay More, Work Longer, Get Less!
NITC Pension Update
The Key Issues . . .
• PAY MORE - Increase in contribution
rates
• WORK LONGER - Proposal to link
Teachers’ retirement age to State
Retirement Age (66? Or 68?)
• GET LESS - Switch from RPI to CPI
and the replacement of Final Salary
pension scheme with ‘CARE’
Current Benefits
Teachers’ Pension
Scheme (NITPS)
Entry after 2007
Teachers’ Pension
Scheme (NITPS)
Entry before 2007








Defined benefits based
on final salary
80ths
NRA 60
You pay 6.4%
Tax free lump sum
Survivors’ benefits
Index linked to RPI
Actuarial reductions 55+







Defined benefits based
on final salary
60ths
NRA 65
You pay 6.4%
No automatic lump sum
Survivors’ benefits
Index linked to RPI
PAY MORE
Contribution rate rise (3.2%)
September
2011
Gross
Annual
Salary
Current
Monthly
6.4%
Potential
Increase to
9.6%
Additional
cost per
month
M1
£21,587
£115.13
£172.69
+£57.56
M6
£31,551
£168.27
£252.41
+£84.14
UPS1
£34,180
£182.29
£273.44
+£91.15
UPS3
£36,755
£196.02
£294.04
+£98.02
UPS3+TA2 £40,488
£215.94
£323.90
+£107.96
L6
£42,378
£226.02
££339.02
+£113.00
L12
£49,129
£262.02
£393.03
+£131.01
L20
£59,808
£318.97
£478.46
+£159.49
Pay More
‘Tiered Contribution’ Rates
Lower
Salary
Higher
Salary
Increase
(against
6.4%)
0%
Membership
% of
m’ship
£14,999
Contribution
Rate in
2012-13
6.4%
<
1,400
0.2%
£15,000
£25,999
7.0%
0.6%
116,000
17.1%
£26,000
£31,999
7.3%
0.9%
117,000
17.2%
£32,000
£39,999
7.6%
1.2%
271,000
39.6%
£40,000
£74,999
8.0%
1.6%
172,000
25.2%
£75,000
£111,999
8.4%
2.0%
4,000
0.6%
£112,000
>
8.8%
2.4%
600
0.1%
Pay more:
What this means for a
Beginning Teacher
In 2014 an NQT, earning £21,588 per annum,
or
£1,799 per month gross . . .
Monthly Deductions:
Tax:
£235
NI:
£143
Pension:
£115 at 6.4% contribution
Pension:
£176 at9.8% contribution
Current Net:
Potential Net:
£1,306 per month (with 6.4% pension)
£1,244 per month (with 9.8% pension)
which is £60 per month worse off
Pay more:
What this means for an
‘average’ Teacher
In 2014 an teacher on UPS3, earning £36,756 per annum,
or
£3,063 per month gross . . .
Monthly Deductions:
Tax:
£488
NI:
£314
Pension:
£196 at 6.4% contribution
Pension:
£294 at 9.8% contribution
Current Net:
Potential Net:
£2,065 per month (with 6.4% pension)
£1,967 per month (with 9.8% pension)
which is £98 per month worse off
WORK LONGER




Teachers’ pension Normal Retirement Age
(NRA)to be aligned to State Retirement
Age (SRA)
Your Normal Retirement Age will rise to
65 in 2018, 66 in 2020 and then to 68 in
2040, and possibly even earlier
Premature retirement with actuarial
reductions?
Few teachers work past 60 at present
GET LESS
the ‘switch’ from RPI to CPI
Justification for switch does not stand up to scrutiny
Historically, CPI around 0.5% lower on average than RPI
over last 5 years. Currently1.1% lower (January 2011)
September 2010 CPI 3.1% (RPI 4.6%)
RPI up-rating of pensions and salaries used for decades
Pensions Increase Order by Secretary of State for Work and
Pensions but linked to wider pensions legislation
GET LESS: RPI to CPI
What this means to you ...
Lord Hutton’s interim report estimates
15% less income over a retirement under
CPI – could be more
Various ways of estimating cost to members:
 Will affect salary initial pension is based
upon
 Will affect pension increases once in
payment
 But we don’t know what RPI and CPI will be
in future
 April 2011 pensions updated by CPI of 3.1%
- would have been 4.6% if RPI
 From April 2011: a retired teacher or
support staff member on a pension of
£10,000 is £150 worse off
‘CARE’ Example…
A Career Average Scheme or CARE
Final salary
e.g. a pension based on:
1/60 x £40,000 x 20 years’ service
CARE
e.g. a pension based on
1 year’s service
x
1 year’s service
x
= new pension
salary of £21,588 1/60th
salary of £23,925 1/60th
for each year of service
(Past years’ salaries increased with inflation – CPI?)
Get Less:
Career Average v Final Salary
Member details Final Salary
pension (80ths
accrual)
CARE pension
(80ths
accrual)
Difference
(starting point)
Mr A, taught
36 years full
time
Average final
salary £41,366
Career average
salary of
£29,991
- 27.5%
Left on
£40,950
Pension
£18,615
Pension
£13,496
- £5,119
Ms F, 17 years’
pensionable
service
Average final
salary
£35,331
Average salary
£30,263
- 15.5%
Left on
£35,114
Pension
£9,715
Pension
£8,211
- £1,504
Negotiated changes to the
scheme in April 2007





After 2007 all new entrants to teaching have
a Normal retirement Age (NRA) of 65
Benefits will be a pension based on 1/60th of
salary per year (with no automatic lump sum)
Those returning to teaching after retirement
may be affected and be designated new
members
Existing teachers at 31/3/07 can still retire at
Normal Retirement Age (NRA) 60
Compulsory retirement ages were abolished
in 2006 – you can work to 75
Timeline



June 2010 Westminster Government announces
switch from RPI to CPI
October 2010 Comprehensive Spending Review
– the government announces £2.8 billion in
savings through increasing contribution rates
January 2011 Rise in employee contribution
rates announced. Teachers will pay an average
of 9.8% by 2014

Industrial Action in England & Wales (TPS) 30
June 2011

Ongoing TUC talks with Government

Announcement by Sammy Wilson 5 Oct 2011
Support for Our
argument

National Audit Office report of December 2010 confirms
huge saving are expected from previous negotiated
changes to public sector pension schemes

£67 Billion to be saved over the next 50 years

‘Cap and share’ agreement should be given the chance
to work, and pay for increased longevity

Treasury has refused to undertaken a valuation, which
would inform better discussion

NAO say the government need to undertake further
analysis on issues such as participation rates,
affordability, recruitment and retention etc.
Northern Ireland

TSCC meeting in May – “we have no
specific proposals at this time”

NI Block Grant from April 2012 assumes
increase in contributions

NI Exec decision on 5 Oct to increase
contribution rates

NITC Unions balloting for industrial action

ICTU campaign with other public sector
unions against all cuts

30 November day of action
Northern Ireland
Teachers’ Council (NITC)






NITC Campaign
Raising Awareness of the issues
Lobby of MPs and MLAs
Petition
Ballot for Industrial Action
30 November – Day of Action
So, what can I do?

Keep yourself informed

Check your union website for updates


Sign the unions’ petition, and
encourage colleagues to do so
Vote YES in your union ballot for
action!
And finally,