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Act Now to Protect Your Pension

Act Now to Protect Your Pension. March 2011. The threat to our pensions. Lord Hutton’s final report on 10 March has set out various options for change – all will cut our pensions Government decided to attack our pensions even before Hutton’s final report

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Act Now to Protect Your Pension

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  1. Act Now to Protect Your Pension March 2011

  2. The threat to our pensions • Lord Hutton’s final report on 10 March has set out various options for change – all will cut our pensions • Government decided to attack our pensions even before Hutton’s final report • George Osborne: ‘the public sector pension bill is unsustainable’ • Nick Clegg: ‘unreformed gold-plated pension pots … just not fair, not affordable’

  3. The current Teachers’ Pension Scheme • Your contribution rate = 6.4 per cent • If you joined in 2006 or earlier • Pension of 1/80 of final salary per year of reckonable service + 3x this as tax free lump sum • Normal pension age = 60 • If you joined in 2007 or later • Pension of 1/60 of final salary per year of reckonable service. No automatic tax free lump sum • Normal pension age = 65

  4. 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

  5. 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

  6. Hutton’s proposals • Pay more • Government says you must pay as much as 9.8% compared to 6.4% now • Work longer • pension age linked to state pension age – currently 65, likely to be 66 by 2020 • higher pension age of up to 68 in the long term • Get less • indexation change from RPI to CPI already imposed by Government • pension based on ‘career average’ rather than final salary

  7. 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 for NQ teachers • up to £102 per month for UPS3 teachers • Tiered contributions – higher paid to pay more

  8. Work longer… • NPA linked to state pension age for all • pension accrued in future would only be available in full at state pension age • Government already plans SPA rise to 66 by April 2020. Will rise to 68 in longer term. • Effect of NPA of 66 • 50 year old on UPS3 who still retires at 60 would lose £1,300 a year from pension and £4,000 from lump sum

  9. Get less… • Indexation - RPI to CPI • affects all members, in place 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 or cost-cutting measure?

  10. 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!

  11. Remember! • The Government wants you to work longer, pay more and get less • By September 2012 the pay freeze and pension contribution hike will have cut your pay by 10 per cent in real terms. • In 2005-6 the NUT and other unions stood together to see off Government threats to slash our pensions. We may need to do so again.

  12. 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 • email the link to 5 friends - ask them to use it • Support the TUC March for the Alternative in London on 26 March – see www.teachers.org.uk/notocuts • Take part in the Union’s surveys of members’ views on pensions • Talk to colleagues and friends - your pension is fair, affordable and does not need to be cut • Be prepared to vote for action!

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