The second hike in teachers’ pension contributions has been ratified by the Department for Education, sparking anger among teachers and heads.
Teachers earning less than £26,000 a year will not see an increase in contributions this year. However, others will pay increased contributions of between 0.6 and 2.4 per cent, depending on how much above £26,000 they earn. The table below breaks down the latest rises.
The changes are part of the three-year plan to increase teachers’ contributions ultimately by 3.2 per cent (from 6.4 to 9.6 per cent) by 2014/15.
Unions are angry, arguing that when combined with an increase in the retirement age to 66 by 2020, the move to a career-average scheme, and the change in inflation link from RPI to CPI, increased contributions are unjustifiable.
The government argues that the rising age of living and an imbalance between employer and employee contributions are “strong reasons to make short-term changes to pensions”.
Speaking this week, Brian Lightman, general secretary of the Association of School and College Leaders, said the latest increases were a ”direct hit” on take-home pay of teachers who are still suffering from a two-year public sector pay freeze.
He added: “The contribution increases do not fund the pension scheme but go towards solving the government’s immediate problems of paying off the national debt. In other words it is a tax on teachers to pay for the costs of the recession.
“We believe that this is entirely the wrong way to approach pension scheme funding for the long-term. ASCL together with the other teaching unions have been united in pointing out the dangers of this approach, but it appears that nothing anyone has said to the Treasury has made the slightest bit of difference.”
Christine Blower, general secretary of the National Union of Teachers, added: “An experienced classroom teacher in England and Wales will now be paying an extra £59 a month in pension contributions compared to March 2012. This is at a time of frozen pay and rising prices. A further increase is planned in April 2014.
“These increases aren’t justified. The government has shamefully decided to cancel the long-delayed 2008 actuarial valuation of the Teachers’ Pension Scheme so there is no objective evidence to justify these increases.”
The decision to go-ahead came after the DfE published the results of a consultation into the second round of increases.
The report states: “The majority of responses, including those from unions, employers and members provided opposition to the policy of increasing pension contributions. However, from the responses received, and the reduction in (Teachers’ Pension Scheme) opt-outs compared to the previous year, the Department has concluded that the proposals represent a reasonable and proportionate means of achieving a legitimate aim.”
The report said that 3,539 teachers opted out of the Teachers’ Pension Scheme between January and November last year, a reduction of 422 compared with the same period in 2011.
The pension contribution increases
The list below shows annual wage followed by three percentages. The first is new pension contributions rate for 2013/14; the second is the increase from the 2012/13 rates; the third is the increase from the 2011/12 rate.
CAPTION: Anger: Teachers have already walked out on strike in protest at the increases to contributions among other changes to their pensions.
- Below £14,999: 6.4%–0.0%–0.0%
- £15,000 to £25,999: 7.0%–0.0%–0.6%
- £26,000 to £31,999: 7.9%–0.6%–1.5%
- £32,000 to £39,999: 8.8%–1.2%–2.4%
- £40,000 to £44,999: 9.2%–1.2%–2.8%
- £45,000 to £74,999: 10.1%–2.1%–3.7%
- £75,000 to £99,999: 10.6%–2.2%–4.2%
- £100,000 to £150,999: 11.2%–2.4%–4.8%