? still a view of state pensions?
This blog is a critique of the Daily Telegraph article which a neighbourhood journalist has sent me (on a legitimate share) out of horror.
Shall we live in future unable to afford pensions for teachers?
We need to come to a conclusion here. We cannot have articles such as this, being published without challenge from people who believe in our pension system. The unfunded pension system that delivers pensions to teachers and other public servants is efficient and effective. Though I am not a beneficiary, I am happy to pay tax to keep it as it is, providing security for millions.
It is expensive to run a proper teaching system and to keep high quality teachers. We have a private system which has lost much of its perks , this has included making it less able to keep teachers in the state pension system. Many good teachers are in the public teaching sector to have a proper pension and I see pensions becoming a long-term means to improve state pensions.
We must have a view that a state education is a privilege that all British people have -including immigrants – including the poorest as well as the richest. That means we strengthen teaching with people who want to do the job for life, with the prospect of retiring in comfort.
My view is that education gives us the grounding the next generations need to drive forward the country and that proper pensions are integral to what the teacher’s pension is promoting. If all sectors , especially the private sector, had a view that people who work for them should retire in ease, we would have a better and more productive pension.
You can read the article here – if you like the Telegraph or below if you’d prefer to make your mind up without going to the paper. You may prefer to remind yourself of what the Teacher’s Pension Scheme offers pensions
From here…
to here…
Teachers’ pensions costing taxpayers £1bn a month
Ballooning public sector bill worth more than double what is spent on students every year
Retired teachers receive more than double the money that is spent on school students every year, official figures show.
Spending per pupil was £7,460 in England and £7,327 in Wales during 2023 to 2024, but retirees in the Teachers’ Pension Scheme were handed an average of £16,600 for the same period.
The cost of payments to retirees has since soared past £1bn a month, while taxpayers will fund another £9bn of payments into current teachers’ pensions this year.
It comes as the Government’s decision to charge VAT on private school fees is expected to raise £1.5bn in 2025 to 2026.
Members of the Teachers’ Pension Scheme are mostly teaching staff from mainstream schools, but some work in participating independent schools, further education and higher education.
When they retire, they are guaranteed an income for life that rises annually with inflation.According to its annual report, the scheme paid £11.3bn to 681,000 retired teachers across England and Wales in 2023 to 2024. A further £559m was paid as part of 83,000 pensions to dependants.
The report also suggests that current teachers will receive £8.8bn in pension contributions during 2024 to 2025.
This would be an increase of almost £2bn compared to the previous year after schools were forced to increase contributions from 23.6pc to 28.6pc to meet the scheme’s spiralling costs.
Liz Emerson, of the charity Intergenerational Foundation, said students were losing out and that politicians should be honest about the cost of public sector pensions.
She said:
“Economists have long warned that over-generous pension promises made in the past would come home to roost. The result is that today’s students are losing out on education spending and resources for their generation as budgets are diverted to pay these annual pensions.
“Furthermore, a double whammy is at work because many of these pensions will be for private school teachers whose pension contributions were topped up not by their schools but by the general taxpayer during their working lives.
“Intergenerational unfairness in the pension system will not stop until politicians tell the truth about the hidden iceberg of liabilities looming below the surface in most public sector pension schemes.”
Government figures also show that since July, the amount paid for retired teachers’ pensions has exceeded £1bn a month.
Like others in the public sector, they are funded on a pay-as-you-go basis, meaning contributions are not invested to pay future pensions.
Instead, payments to retirees are made from general taxation and the contributions coming in.
However, the rising cost of the Teachers’ Pension Scheme is already forcing some schools to withdraw, which could lead to less money coming in – and a larger shortfall for taxpayers to plug.
United Learning, the UK’s largest academy chain, is already offering teachers higher salaries to opt out of the scheme, while around 400 private schools – which do not legally have to offer membership – have already closed it to new staff or left altogether.
Teachers at some private schools have gone on strike after their employer threatened to fire and rehire them unless they withdrew in a desperate attempt to cut costs.
A Department for Education spokesman said: “Teachers are at the heart of the Government’s mission to break down barriers to opportunity – there are 680,890 retired members of the Teacher Pension Scheme who have dedicated their careers to teaching children, ensuring that they can achieve and thrive.
“The pension in payment to a retired teacher is based on their entire career – they deserve to receive the benefits that they have accrued and a guaranteed income in retirement is one of the rewards for teaching.
“The Teacher Pension Scheme remains one of the most generous pension schemes available and is a key part of the recruitment and retention of the best and brightest teachers.”
The National Education Union was approached for comment.
“Teachers based in Scotland have separate pension agreements.”
https://pensions.gov.scot/teachers/about-teachers-pensions/how-your-pension-works
CARE DB since 2015, more traditional DB before that.
Is the whole DB concept a gambit on inflation and economic growth meaning future payments will be a smaller proportion of our overall lot in the future, vs today… thus it’s better to promise it in the future, than pay a fair salary today from which they can make an actual pension savings pot?
If the gambit doesn’t pay off, then reality bites and you need to dig (very) deep into your pockets to pay up.
Why did no one spot that the economy might not grow fast enough to out-pace inflation and make these benefit promises easily manageable?
Why do people keep defending this flawed methodology of providing income in later life, that at best gives a surplus but at worst puts giant holes into public finances at the worst possible time, leaving essential service workers at loggerheads with the rest of society?
And let’s not pretend this train hasn’t been slowly crashing for 20 years now. I remember a pension chap telling me about the near £1Tn unfounded liabilities (and growing) in the late 2000s to an audience of about 40 pension communicators.
I hope that we do not give up on the aspiration to grow the economy faster than inflation. I was brought up on that and it has only been the last 20 years when we seem to have got scared of going forward. We live now with a sense of failure hanging around us, it’s not the same in other countries who pay more attention to success- Scotland comments much welcomed as Scotland seems to have a better attitude to paying things than we in England , Wales and Northern Ireland do (expect I’ve got NI wrong but here’s giving them a helping hope!)
I do wonder what telegraph writers and readers think the solution to recruitment crisis in teaching might be. Cutting pay via pensions seems unlikely to help…
Meanwhile the Institute for Fiscal Studies (IFS) has suggested that allowing teacher numbers to fall “in line with pupil numbers” could save Scottish local governments £500 million in today’s terms by 2040.
In response to the IFS report, the NASUWT-The Teachers’ Union and the Educational Institute of Scotland (EIS) issued statements rejecting the IFS’s suggestions.
An EIS spokesperson said that teachers are the most important resource in education, and allowing teacher numbers to fall “lacks any educational rationale”.
“The Scottish Government has rightly prioritised the ending of child poverty and increased investment in education is a key part in the realisation of that goal. Increased investment is required to tackle the challenges facing the Scottish education system and this includes both the recruitment and retention of teachers.”
Stop making so much more sense than I do Byron!