Pay More, Work Longer, Get Less! NITC Pension Update Teachers’ Pensions Under Attack!

The Key Issues... PAY MORE - Increase in contribution rates WORK LONGER - Proposal to link Teachers’ retirement age to State Retirement Age (66? Or 68?) GET LESS - Switch from RPI to CPI and the replacement of Final Salary pension scheme with ‘CARE’

Current Benefits Teachers’ Pension Scheme (NITPS) Entry before 2007 Defined benefits based on final salary 80ths NRA 60 You pay 6.4% Tax free lump sum Survivors’ benefits Index linked to RPI Actuarial reductions 55+ Teachers’ Pension Scheme (NITPS) Entry after 2007 Defined benefits based on final salary 60ths NRA 65 You pay 6.4% No automatic lump sum Survivors’ benefits Index linked to RPI

PAY MORE Contribution rate rise (3.2%) September 2011 Gross Annual Salary Current Monthly 6.4% Potential Increase to 9.6% Additional cost per month M1£21,587£115.13£ £57.56 M6£31,551£168.27£ £84.14 UPS1£34,180£182.29£ £91.15 UPS3£36,755£196.02£ £98.02 UPS3+TA2£40,488£215.94£ £ L6£42,378£226.02££ £ L12£49,129£262.02£ £ L20£59,808£318.97£ £159.49

Pay More ‘Tiered Contribution’ Rates Lower Salary Higher Salary Contribution Rate in Increase (against 6.4%) Membership % of m’ship <£14,9996.4%0%1,4000.2% £15,000£25,9997.0%0.6%116, % £26,000£31,9997.3%0.9%117, % £32,000£39,9997.6%1.2%271, % £40,000£74,9998.0%1.6%172, % £75,000£111,9998.4%2.0%4,0000.6% £112,000>8.8%2.4%6000.1%

Pay more: What this means for a Beginning Teacher In 2014 an NQT, earning £21,588 per annum, or £1,799 per month gross... Monthly Deductions: Tax:£235 NI:£143 Pension:£115 at 6.4% contribution Pension:£176 at9.8% contribution Current Net:£1,306 per month (with 6.4% pension) Potential Net:£1,244 per month (with 9.8% pension) which is £60 per month worse off

Pay more: What this means for an ‘average’ Teacher In 2014 an teacher on UPS3, earning £36,756 per annum, or £3,063 per month gross... Monthly Deductions: Tax:£488 NI:£314 Pension:£196 at 6.4% contribution Pension:£294 at 9.8% contribution Current Net:£2,065 per month (with 6.4% pension) Potential Net:£1,967 per month (with 9.8% pension) which is £98 per month worse off

WORK LONGER Teachers’ pension Normal Retirement Age (NRA)to be aligned to State Retirement Age (SRA) Your Normal Retirement Age will rise to 65 in 2018, 66 in 2020 and then to 68 in 2040, and possibly even earlier Premature retirement with actuarial reductions? Few teachers work past 60 at present

GET LESS the ‘switch’ from RPI to CPI Justification for switch does not stand up to scrutiny Historically, CPI around 0.5% lower on average than RPI over last 5 years. Currently1.1% lower (January 2011) September 2010 CPI 3.1% (RPI 4.6%) RPI up-rating of pensions and salaries used for decades Pensions Increase Order by Secretary of State for Work and Pensions but linked to wider pensions legislation

GET LESS : RPI to CPI What this means to you... Lord Hutton’s interim report estimates 15% less income over a retirement under CPI – could be more Various ways of estimating cost to members: Will affect salary initial pension is based upon Will affect pension increases once in payment But we don’t know what RPI and CPI will be in future April 2011 pensions updated by CPI of 3.1% - would have been 4.6% if RPI From April 2011: a retired teacher or support staff member on a pension of £10,000 is £150 worse off

‘CARE’ Example… A Career Average Scheme or CARE Final salary e.g. a pension based on: 1/60 x £40,000 x 20 years’ service = new pension CARE e.g. a pension based on 1 year’s service x salary of £21,5881/60th 1 year’s service x salary of £23,9251/60 th for each year of service (Past years’ salaries increased with inflation – CPI?)

Get Less : Career Average v Final Salary Member detailsFinal Salary pension (80ths accrual) CARE pension (80ths accrual) Difference (starting point) Mr A, taught 36 years full time Left on £40,950 Average final salary £41,366 Pension £18,615 Career average salary of £29,991 Pension £13, % - £5,119 Ms F, 17 years’ pensionable service Left on £35,114 Average final salary £35,331 Pension £9,715 Average salary £30,263 Pension £8, % - £1,504

Negotiated changes to the scheme in April 2007 After 2007 all new entrants to teaching have a Normal retirement Age (NRA) of 65 Benefits will be a pension based on 1/60 th of salary per year (with no automatic lump sum) Those returning to teaching after retirement may be affected and be designated new members Existing teachers at 31/3/07 can still retire at Normal Retirement Age (NRA) 60 Compulsory retirement ages were abolished in 2006 – you can work to 75

Timeline June 2010 Westminster Government announces switch from RPI to CPI October 2010 Comprehensive Spending Review – the government announces £2.8 billion in savings through increasing contribution rates January 2011 Rise in employee contribution rates announced. Teachers will pay an average of 9.8% by 2014 Industrial Action in England & Wales (TPS) 30 June 2011 Ongoing TUC talks with Government Announcement by Sammy Wilson 5 Oct 2011

Support for Our argument National Audit Office report of December 2010 confirms huge saving are expected from previous negotiated changes to public sector pension schemes £67 Billion to be saved over the next 50 years ‘Cap and share’ agreement should be given the chance to work, and pay for increased longevity Treasury has refused to undertaken a valuation, which would inform better discussion NAO say the government need to undertake further analysis on issues such as participation rates, affordability, recruitment and retention etc.

Northern Ireland TSCC meeting in May – “we have no specific proposals at this time” NI Block Grant from April 2012 assumes increase in contributions NI Exec decision on 5 Oct to increase contribution rates NITC Unions balloting for industrial action ICTU campaign with other public sector unions against all cuts 30 November day of action

Northern Ireland Teachers’ Council (NITC) NITC Campaign Raising Awareness of the issues Lobby of MPs and MLAs Petition Ballot for Industrial Action 30 November – Day of Action

So, what can I do? Keep yourself informed Check your union website for updates Sign the unions’ petition, and encourage colleagues to do so Vote YES in your union ballot for action!

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