Agreement on teachers’ pensions changes brings benefits

17 May 2006

The National Union of Teachers has warmly welcomed a new deal on teachers’ pensions reached with the Government and local authorities in England and Wales, details of which were released today (Wednesday May 17, 2006).

The changes meet all the Union’s key objectives and provide a fair balance between the interests of existing and future teachers. Under the scheme, which comes into effect on January 1, 2007, existing and future teachers will receive a package of valuable improvements to their pension scheme benefits.

• Unmarried partners would receive the same benefits as married and civil partners.
• The pensions of teachers whose pay was reduced in the ten years prior to retirement would be protected, benefiting in particular those with Management Allowances who did not secure TLR payments.
• New opportunities for phased retirement  would allow teachers to wind down prior to retirement without the current pension penalties.
• There would be greater freedom for teachers in dividing their pensions between tax free lump sums and continuing index-linked pensions.
• A facility to purchase up to £5,000 of added pension benefits.
• There would be a death grant of three times salary.
• Spouses’ and nominated partners’ pensions would be paid for life from 1 January 2007.

Currently, the tax free lump based on 3/80th calculation amounts to 13 per cent of teachers’ total pension benefits.  Under the new arrangements teachers would be entitled to take up to 25 per cent of benefits as tax free lump sums with lower continuing pensions.

Existing teachers have their current entitlements protected including the right to retire at 60 with no reductions in benefits.  From September 2006 new entrants will have a normal pension age of 60.  From 2007, new entrants will have a better pension accrual rate to help offset their normal pension age of 65. 

From 1 January 2007 teachers’ contributions rise from the current 6 per cent of salary to 6.4 per cent. The employers’ contribution rises from 13.5 per cent to 14.1 per cent.  These increases are needed to pay for the improvements in benefits and protect the scheme.

Commenting, Steve Sinnott, NUT General Secretary, said: “These changes result from intense and constructive negotiations between all the teachers’ organisations, the employers and the Government. They will improve, maintain and protect one of the best occupational pension schemes in the UK.

“There is clear recognition of societal changes and the threat to salary levels of teachers who lose out under the change to teaching and learning responsibilities. All these improved benefits will continue to help to recruit and retain young people in the profession.”