Act Now to Protect Your Pension

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!