Transcript Hutton Enquiry into Teachers’ Pension Scheme

Act Now to
Protect Your Pension
January 2011
The threat to our pensions
• John Hutton’s initial report sets out various
options for change – all will cut our pensions
• George Osborne: ‘the public sector pension
bill is unsustainable’
• Nick Clegg: ‘unreformed gold-plated
pension pots … just not fair, not affordable’
• The Government has decided to impose
higher contributions even before Hutton’s
final report – this is the start of the attack on
our pensions
The Current Teachers’ Pension
Scheme
• Your contribution rate = 6.4 per cent
• If you joined on or after 1 January 2007
• Pension of 1/60 of final salary per year of
reckonable service. No automatic tax free lump
sum
• Normal pension age = 65
• If you joined on or before 31 Dec 2006
• Pension of 1/80 of final salary per year of
reckonable service + 3x this as tax free lump sum
• Normal Pension Age = 60
Hutton’s proposals
• Pay more
• Government says you must pay 9.5 % or even
more compared to 6.4% now
• Work longer
• pension age of 65 for all teachers?
• maybe even higher in the longer term?
• Get less
• indexation change from RPI to CPI already
proposed by Government
• “career average” scheme?
The case against change (1)
• Teachers’ pensions are fair!
• The average teachers’ pension in payment is
less than £10,000; only 5% are over £20,000
• Cuts will hit women teachers hardest
• Teachers are saving for retirement – this
should be commended not condemned
The case against change (2)
• Teachers’ pensions are affordable!
• TPS already reformed to reduce costs
• normal pension age now 65 for new teachers
• higher contribution rate of 6.4% for all
• cost-sharing agreement limits employer’s
contribution to 14%
• Costs will fall as planned – cutting our
pensions is a political choice not an economic
necessity
Pay more…
• Higher contributions?
• to make short term savings
• to make employer and employee contributions
more equal
• Effect of increase to 9.8%
• Up to £61 per month extra for NQ teachers
• Up to £102 per month extra for UPS3 teachers
• Tiered contributions as in local government?
Work longer…
• NPA of 65 for all teachers?
• pension accrued in future would only be available
in full at age 65
• Effect of NPA of 65
• 50 year old on UPS3 who still retires at 60 would
lose £1500 per year
• Even higher NPA as State pension age.
• Government already plans SPA rise to 66 by April
2020. Could rise to 68?
Get less…
• Indexation - RPI to CPI
• affects all members, planned for April 2011
• breach of election promise – and accrued rights?
• Effect of RPI to CPI
• a teacher retiring on a £20,000 pension will lose
£70,000 over their retirement
• “Career average” not “final salary”?
• pension based on pay across whole career
• “fairer” pensions?
The real pension problem
• Two-thirds of private sector employees are
not in any employer-backed pension scheme
• 87% of private sector final salary pension
schemes are closed to new members
• Cutting public sector pensions won’t help
private sector workers in retirement - we
need decent pensions for all!
What you can do
• Email your local MP
• go to www.teachers.org.uk/pensions - ask your
MP to oppose contribution rises and RPI to CPI
• Talk to colleagues and friends - your
pension is fair, affordable and does not need
to be cut!
• Find out what you will stand to lose – use the
pensions calculator on the NUT website.
• Vote YES in the NUT/ATL strike ballot.
• Organise a delegation from your school on
June 30th strike day.
Remember!
• In 2005-6 the NUT and other unions saw off
Government threats to slash our pensions
by taking a united stand
• We succeeded by standing together and
being prepared to take action
• We now need to stand together once again
to defend our pensions. The PCS and UCU
now look set to strike alongside us. There
could be 800,000 on 30 June.
• There could be further action in the
Autumn, involving other unions.
Don’t forget to Vote!
The Government and the media
are likely to interpret every unused
vote as a No Vote.