1. Health & Safety Advisors’ Briefing November 2015
Pensions Update
Health & Safety Advisors’ Briefing
November 2015

2. New State Pension
Introduction of new ‘single tier’ pension from April 2016
Replaces current basic state pension and additional state pension
Maximum £151 a week (compared to £116 for basic state pension)
Triple lock indexation (higher of national average earnings, CPI inflation and 2.5 per cent)
35 years to get full pension.
Existing state pensioners unaffected
More info at:

3. Transition to Single Tier
Transition process – people start on higher of position under old system (basic state pension + additional state pension) and position under new system (minus ‘rebate-derived amount’)
People then ‘earn’ extra single tier pension at 1/35 of maximum per year
Teachers are net gainers from single tier pension (single tier pension revenue-neutral overall)

4. End of contracting out Contracting out ends from April 2016
Employee NICs to rise 1.4 per cent. Employer NICs to rise 3.4 per cent (on earnings between approximately £8,000-41,000)
Employer contributions in TPS rose from 14.1 per cent to 16.4 per cent from September 2015
Net effect of Employer NICs and TPS contribution rise approximately 4.8 per cent of salary bill

5. Teachers’ Pension Scheme
Career average pension scheme introduced April 2015
Employee contribution rate = average 9.6 per cent
Normal Pension Age (NPA) = Equal to State Pension age (65 to 68 depending on age)
Accrual rate = 1/57, revaluation rate = CPI per cent (in-service teachers)
Powerpoint (and briefing notes!) available at

6. TPS Transitional protection
Teachers within 10 years of NPA on 1 April 2012 stay in current final salary scheme
Teachers up to further 3.5 years away have tapered protection. Each month younger than full protection cut-off, they lose 2 months of protection
Everyone else was switched into CA scheme on 1 April 2015
FS NPA 60 Scheme Member
Age at April 2012
Age when moving to CA Scheme 50
Stays in FS Scheme
49 years 6 months
58.5 (1 April 2021)
49 years
57 (1 April 2020)
48 years 6 months
55.5 (1 April 2019)
48 years
54 (1 April 2018)
47 years 6 months
52.5 (1 April 2017)
47 years
51 (1 April 2016)
46 years 6 months, 1 day
49 years 8 months (1 June 2016)
46 years 6 months
49 years 6 months (no protection)

7. Employee Contribution Rate
Average employee contribution rate = 9.6 per cent
Contributions based on actual salary, not FTE salary
Likely to remain as contribution structure (with bands increased with CPI inflation) until 2019
Salary Band
Contribution Rate
£0 - £25,999
7.4%
£26,000 - £34,999
8.6%
£35,000 - £41,499
9.6%
£41,500 - £54,999
10.2%
£55,000 - £74,999
11.3%
£75,000+
11.7%

8. Administration of career average scheme
CA pension based on pay – every payslip counts!
Fragmentation of education system risks lower administration standards
Vital that members frequently check and correct records
Members should keep payslips, P60s and TPS pension statements
Teachers’ Pensions to cease automatic paper benefit statements. Members should seriously consider registering for TP’s ‘MyPensionOnline’ service

9. Interaction between FS and CA pension rights
Post 2015 most teachers will have FS pension and CA pension
Final salary based on salary when exit teaching, not salary in 2015
Members can take FS pension in full at current NPA (but must end contract)
If a member takes FS pension at (or beyond) FS NPA – can take or leave CA rights
If member takes FS pension before FS NPA (ie as an actuarially reduced pension) – member must also take CA pension rights

10. Ill-Health Early Retirement (1)
The applicant must be: incapacitated if, as a result of illness or injury, the applicant is unfit to be in eligible employment despite appropriate medical treatment
The condition is met if the person is incapacitated and likely to be incapacitated permanently
The applicant meets the total incapacity condition if they are incapacitated as above and their ability to carry out any work is impaired by more than 90 per cent and is likely to be impaired by more than 90 per cent permanently
‘unfit to be in eligible employment’ means incapable of serving efficiently in any post for two days a week, not incapacity to do the job the member was doing previously

11. Ill-Health Early Retirement (2)
CA Scheme still has two levels of benefit
- Total Incapacity Benefit (TIB)
- Partial Incapacity Benefit (PIB)
In CA Scheme, ‘in-service’ applications can be made up to 2 years from the last day of pensionable service
Improves on previous position where application must be made within six months of leaving pensionable employment or within a period of unpaid leave (agreed sick leave, maternity, paternity etc) which immediately followed period of pensionable employment

12. Ill-Health Early Retirement (3)
Pension (+ any enhancement) for IHR based on teacher’s FTE final salary (not average salary)
Exception = if member steps down due to ill health and subsequently retires – TIB enhancement based on indexed salary pre-stepping down (or final salary if higher)

13. Working Longer Review
DfE have set up tripartite ‘Working Longer Review’. Aims of review:
To explore the health and deployment implications of teachers working longer; to consider possible options to mitigate these implications where necessary; and to make recommendations to the Secretary of State
To provide evidence that can be used by stakeholders to contribute to any Government reviews of the state pension age (SPA) and the link between normal pension age and SPA in public sector schemes
Final report expected Autumn 2016

14. WLR- Literature Review
Literature Review initial analysis concluded
Existing empirical research not extensive and does not cover all of WLR’s lines of enquiry
Studies often small scale and one country. Age differentiation often crude (e.g. over/under 55, not relating to those aged or 65-69)
Very few studies of whether interventions (e.g. occupational health, features of pension schemes like phased retirement) make a difference

15. WLR – Key findings: Teachers’ Health
Compared to comparator occupations – relatively more stress-related illness; lower levels of sickness absence up to age 55, then similar
Within education workforce: classroom teachers appear to be more likely to have ill health affect their job/motivation than higher education teachers, head teachers and teaching assistants
Stress / mental health related illness more common than physical illnesses
Stress related illness most common category for ill-health retirements

16. WLR – Key findings: Teachers’ Health and Age
Compared to comparator occupations – relatively more stress-related illness; lower levels of sickness absence up to age 55, then similar
Older teachers have a lower sense of wellbeing and healthiness than younger teachers. Also feel less valued than younger teachers
Unclear whether stress-related illnesses rise or fall with age
No evidence to suggest that work ability of teachers declines significantly with age
No evidence to suggest that older teachers have negative effect on student outcomes

17. WLR – Timescales
November 2015: Consideration of need for further research
November – December 2015: Interim Report
December 2015 – January 2016: Publication of preliminary findings
April 2016 – May 2016: Draft Report
September 2016: Final Report submitted to Secretary of State
October 2016: Secretary of State publishes response to Report