Who? …..Me?

No! …..You!

“Pensions Apartheid”

“Unfair and Unaffordable”

The Blame Game

The Real AgendaThe Government plans to make the biggest real

terms cuts in public spending since the 1920s80% of the cost or removing the deficit will be

public spending cuts with 20% being tax risesMost economists question the wisdom of such

large and rapid cutsMost of the savings in education will

come from cutting the pay and pensions of teachers and other staff

Cuts£99 billion per year less public spending by 2014-15 Total education spending is £89 billionTotal spending attributed to schools is about £65

billionThis includes teachers’ pensions and BSFBSF and other capital programmes were £6.5 billion

in 2009-10Non-school education spending being cut by 25%

over 4 years – front loadedSchool cash per pupil frozen plus cuts of some grants

Their Fault, Why Should We Pay?

Public Sector PensionsThe total value of public sector pensions is less than 2% of

GDP and will fall in the medium termPublic sector schemes have reviews to ensure that they pay

for themselves from employer and employee contributions in the long-term

Most of the highest pensions are in the private sector – that’s where the real “apartheid” is, because most lower paid workers in the private sector have no scheme at all

Most local government workers have pensions of less than £5000 per annum

The average teachers’ pension in payment is less than £10,000; only 5% are over £20,000

Affordable

Source: Hutton ReportNote: The fan chart shows how the projections would be affected by altering assumptions about productivity growth, public service workforce growth and life expectancy

Current Teachers’ SchemeSome service before 2007

PENSION – Normal Pension Age 60 (80ths) Final Average Pay (UPS3): £36756 Membership: 35 years36756 x 35 years = 16080 Pension

8036756 x 35 years = 48242 Lump Sum

(tax free) 3/80These are at Age 60

Current Teachers’ SchemeService only from 2007

PENSION – Normal Pension Age 65 (60ths) Final Average Pay (UPS3): £36756 Membership: 35 years36756 x 35 years = 21441 60 At age 65 Pension : £21441 Lump sum: £1 commutation for £12 At age 60 (actuarially reduced): Pension: £16145 Lump sum: £1 for £12

Current Teachers’ SchemeOTHER BENEFITS: Survivor benefits are paid to spouses, children,

registered civil partners and specific related financial dependants.

Long term pensions are paid to adult survivors at rate of 1/160 of final average salary for each year of reckonable service.

Children at the rate of 1/320 up to a maximum of 1/160 for 2 or more children.

Death in service lump sum payment. Ill-health retirement pension.

Teachers’ Pensions AffordableTPS was reformed to reduce costs in 2007

• normal pension age raised for new entrants• higher contribution rate of 6.4% for all• cost-sharing agreement limits employers’

contribution to 14% Contributions and benefits balance out in the longer

term, as an actuarial review was about to show

cutting our pensions is a political choice, not an economic necessity

Highway Robbery Part 1 - IndexationTeachers’ Pensions currently go up each year in

line with increases in the Retail Price IndexFrom April the Government wants them to

increase in line with the Consumer Price IndexThe CPI is deliberately constructed to produce

lower apparent inflationOn average it measures inflation at 0.7% less per

yearOver the average lifetime this knocks

£70,000 off the value of a £20,000 per annum pension

The Human ShieldPresent Government established

a Public Services Pensions Commission chaired by John Hutton, former Labour minister

Remit – “the growing disparity between public service and private sector pension provision”

BUT – only looking at public sector

Unaffordability of pensions misleadingly talked up

Commission reported in March 2011

Highway Robbery Part 2Work Longer! Get Less! Pay More!

Work longer…1. Normal Pension Age of 65 for future service for all

teachers as soon as the scheme can be changed2. “Increase the member’s Normal Pension Age in the

new scheme so that it is in line with their State Pension Age”

i.e. 66 by 2020 or earlier (for teachers who are 56/57

now) 67 by 2036 or earlier (for teachers who are 40/41

now) 68 by 2046 or earlier (for teachers who are 30/31

now)

Get less……..A Lot Less!Indexation - RPI to CPI

breaches “accrued rights” promisereduces the total value of your pension by 13-

14% over an average lifetimeRaising Normal Pension Age

If you are 50 year now on UPS3 and in the scheme before 2007 then retiring at 60 you would lose £1500 per year

“Career average” not “final salary” pensionFurther reduces the value of the pension of any

promoted teacher. Each year’s salary revalued in line with average earnings

To Be ContinuedOther points in Hutton’s final report1. Exclusion of some groups from public sector

schemes, who might include teachers in privatised services and private schools

2. Making employees such as teachers pay more so that employers can pay less

3. Valuing pay-as-you-go schemes such as ours differently to justify making us pay more

4. Worsening public sector pensions so that it is easier for private contractors to bid to run public services

Osborne Couldn’t WaitOsborne had already a assumed a 3.5%

contribution increase phased in from 2012 as part of his Budget package to reduce public spending

Effect of 3.5% extra• £61 per month for NQ teachers• £102 per month for UPS3 teachers

Unions have been invited to say how this could be achieved!

Tiered contributions, as in local government?

Effect of Pay Freeze and Increased Pension Contributions2.3% Pay rise September 2010 – inflation 4.6%0% pay rise September 2011 – inflation expected to be

3.5%3.5% extra pension contributions phased from April

20120% pay rise September 2012 – inflation expected to be

3%

Net result: 12.3% fall in real income while at work

Pension changes likely to reduce average income by a further 20% in retirement

Lifetime Cost – More than £100,000Implemented before the end of this Parliament

An Injury To AllTeachers are not the only ones whose pensions

are under threatNor is it only other public sector workersThe RPI to CPI change will hit the state pensionEveryone will be affected by the accelerated

rise in the state pension ageMost private sector schemes are likely to be

worsened by the RPI to CPI changePeople with the least pension provision will also

be affected by welfare benefit cuts

Fighting BackTo Do Now – email your MP -

www.teachers.org.uk/pensions Get your colleagues to do the sameTo Follow – petitions, lobbies, school motionsDemonstrate on March 26thJoint Industrial Action with other unionsIn 2005-6 the NUT and other unions saw off

Government threats to slash our pensionsWe succeeded by standing together and

being prepared to take action

Members Should Be AngryThey Should Act On Their AngerThis Is A Very Big Injustice That

Has To Be Fought NowOr We Will Pay A Heavy Price

For The Rest Of Our Lives