Hey You! with the Gold-Plated Pension!

Who? …..Me?

No! …..You!

“ Pensions Apartheid ” “Unfair and Unaffordable” The Blame Game

The Real Agenda The Government plans to make the biggest real terms cuts in public spending since the 1920s 80% of the cost of removing the deficit will be public spending cuts with 20% being tax rises Most economists question the wisdom of such large and rapid cuts Most of the savings in education will come from cutting the pay and pensions of teachers and other staff

Public Sector Pensions The total value of public sector pensions is less than 2% of GDP and will fall in the medium term Public 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

Current Teachers’ Scheme  Normal Pension Age 60 (joined before Jan 2007)  1/80 of final salary as pension for each year + 3/80 as lump sum  Final Average Pay: £36645  Membership of scheme:35 years x 35 years = x 35 years = /80 At age 60:  Pension: £16032 per year  Lump sum: £48096 tax free

Current Teachers’ Scheme Normal Pension Age 65 (Joined Jan 2007 onwards) 1/60 final salary as pension for each year, lump sum to be bought  Final Average Pay:£36645  Membership of scheme:35years x 35 years = At age 65  Pension : £21376  Lump sum: giving up £1 pension buys £12 lump sum At age 60:  Pension: £16096  Lump sum: £1 for £12 Retiring at 62 produces same benefits as at 60 in old scheme

Current Teachers’ Scheme Other 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 Affordable TPS 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 - Indexation Teachers’ Pensions currently go up each year in line with increases in the Retail Price Index From April the Government wants them to increase in line with the Consumer Price Index The CPI is deliberately constructed to produce lower apparent inflation On average it measures inflation at 0.7% less per year Over the average lifetime this knocks £70,000 off the value of a £20,000 per annum pension

The Human Shield Present 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 will report for Budget 2011 after its interim report Sept 2010

Hutton’s Interim Report – Soothing Words Hutton’s interim report came out in October “The downward drift in pension provision in the private sector does not however provide sufficient support or justification in my view for the argument that pensions in the public sector must therefore automatically follow the same course … I have therefore rejected a race to the bottom as the only answer…” Then....

Highway Robbery Part 2 Hutton’s Recommendations

Pay more… “The most effective way to make short-term savings is to increase member contributions and there is also a clear rationale for doing so… The increase in longevity also means that these pensions are now likely to be paid out for longer, increasing the overall costs. These extra costs, despite recent reforms, have not been equally split between employer and employees…” Hutton Interim Report Osborne assumes 3% contribution increase in 2012 as part of the Cuts package to reduce public spending Effect of 3% extra £40+ per month for NQ teachers £70+ per month for UPS3 teachers Tiered contributions as in local government?

Work longer… NPA of 65 or higher for all teachers strongly hinted at schemes should ensure that ‘normal pension ages are in line with developments in longevity’. pension accrued in future would only be available in full at age 65 Even higher Normal Pension Age in all schemes as State pension age rises to 68?

Get less… Indexation - RPI to CPI breaches “accrued rights” promise affects all members, planned for April 2011 reduces the total value of your pension by 13-14% over an average lifetime Raising Normal Pension Age for all to 65 If you are 50 years old now, on UPS3 and in the scheme before 2007, then retiring at 60 you would lose £1500 per year “Career average” not “final salary”? An easy way of reducing the value of the pension of any promoted teacher

To Be Continued In his second phase, Hutton will look at 1. Whether to exclude some groups from public sector schemes, such as teachers in privatised services and private schools 2. Whether to go further in making employees such as teachers pay more so that employers can pay less 3. Whether pay-as-you-go schemes such as ours should be valued differently so that more has to be paid 4. Whether public sector pensions should be worsened so that it is easier for private contractors to bid to run public services

Effect of Pay Freeze and Increased Pension Contributions 2.3% Pay rise September 2010 – inflation 4% 0% pay rise September 2011 – inflation expected to be 3.5% 3% extra pension contribution April % pay rise September 2012 – inflation expected to be 3% Net result 11.2% fall in real income while at work Pension changes likely to reduce average income by 20% or more in retirement

An Injury To All Teachers are not the only ones whose pensions are under threat Nor is it only other public sector workers The RPI to CPI change will hit the state pension Everyone will be affected by the accelerated rise in the state pension age Most private sector schemes are likely to be worsened by the RPI to CPI change People with the least pension provision will also be affected by welfare benefit cuts

Fighting Back To Do Now – your MP Get your colleagues to do the same To Follow – petitions, lobbies, school motions In the Spring: a big demonstration – March 26th Joint Industrial Action with other unions In the NUT and other unions saw off Government threats to slash our pensions We succeeded by standing together and being prepared to take action

Be Angry You Have A Right To Be Angry This Is An Injustice That Has To Be Fought Now Or You Will Pay A Heavy Price For The Rest Of Your Life