WOMEN TEACHERS
YOUR PENSION IS IMPORTANT!
SEPTEMBER 2014
YOUR PENSION UNDER THREAT
· The Government has made changes to the Teachers’ Pension Scheme which will worsen its terms from April 2015. These changes fall into three categories: pay more, work longer and get less.
· Pay More: Overall, teachers are now paying an average 9.6 per cent of salaries towards their pensions – up from 6.4 per cent before the changes came in. How much extra you pay depends on what you earn.
· Work Longer: Teachers who have joined the scheme since 2007 have a ‘Normal Pension Age’ (NPA) of 65. Those who joined before 2007 have an NPA of 60. Most teachers will be moved into the new career average scheme from April 2015. The Government proposes that for future service in the career average scheme, your NPA will be linked to your state pension age. This means teachers aged 34 or below (as at April 2012) will work to age 68 for a full pension. The NUT thinks that teachers can’t be expected to work to age 68 for a full pension - see www.68istoolate.org.uk for more.
· Get Less: Your pension will be lower because the Government has changed the indexation method from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI) for yearly pension increases. The RPI is on average 0.7 per cent a year higher than CPI meaning future increases will be lower. Over the course of a 25-year retirement, a teacher starting with a £10,000 pension would on that basis receive over £30,000 less because of the switch from the RPI to the CPI.
· The Government is replacing the current ‘final salary’ scheme based on salary at or near retirement with ‘career average’ pensions based on your average pay across your whole career. The plan for career average schemes will involve teachers facing significant cuts to their future pension income.
· These changes were unnecessary. The Government is making these proposals to save on costs, not to improve the terms of teachers’ pensions. The NUT believes the Teachers’ Pension Scheme was affordable and fair.
· The real problem in UK pensions is that private sector provision is inadequate. Cutting public service pension schemes will not improve pensions for private sector workers – it will just lead to low pensions for everyone. We need decent pensions for all.
· Turn over to find out what the scheme offers you and what you can do to help protect it.
YOUR PENSION SCHEME - WHAT IT OFFERS AND WHY IT MATTERS
· Your pension is the most important and valuable benefit available for teachers. It’s one of the biggest assets you’ll ever own. Despite the Government’s reforms, the TPS is still worth joining. Your employer pays a contribution to your pension so don’t line your employer’s pockets by opting out.
· If you joined the scheme before 2007 you get 1/80 of your final salary for each year of service plus 3x this as a tax-free lump sum. This can be taken in full at age 60. If you joined on or after 1 January 2007 you get 1/60 of your final salary per year but no automatic tax-free lump sum. This can be taken in full at age 65.
· Teachers switched to the career average scheme from April 2015 will build up 1/57 of their career average salary per year. So if you earn £28,500 in a year, you bank £500 in pension, which is indexed to retirement. At retirement, each separate year of pension is added together to form the total pension.
· Women generally have lower pensions than men. This is because women teachers tend to have breaks in service to raise a family, enter into the teaching profession later in life, or have a lower average final salary than men.
· Women tend to live longer than men, meaning they could need to survive longer on their own pension. It’s not nice to think about it, but factors like death and divorce mean you can’t necessarily rely on a partner’s pension.
· Teachers’ Pensions send you an Annual Benefit Statement, unless you register online at www.teacherspensions.co.uk . It is important to check it very carefully, especially your service record, and query anything you are not sure of. Check your pay statements so you can rectify any discrepancies ASAP.
· Part-time teachers now automatically remain members of the scheme when they reduce their hours. You build up service pro-rata, for example if you work 0.6; you build up 219 days of service per year.
· You can nominate a person or persons to receive a death grant of 3x salary if you die in service. It is important to keep the details of your nomination up to date, and amend if there is a significant change in your personal circumstances. If there is no other nomination, your spouse, civil partner or nominated unmarried partner will automatically receive the grant. Update your nominee details online or by post.
WHAT YOU CAN DO TO PROTECT THE TEACHERS’ PENSION SCHEME
· Follow our campaign to Stand Up for Education and be prepared to take action. Find out more about the dispute at www.teachers.org.uk
· Write to your local MP and ask them to support the Teachers’ Pension Scheme.
· Go to our Pension Calculator at www.teachers.org.uk/pensionscalc to find out what you’ll lose under the Government’s reforms - ask your colleagues to do the same.
· Make sure your colleagues and friends know the truth – that public service pensions are affordable and worth protecting.