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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?)

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Pay More, Work Longer, Get Less! NITC Pension Update

Teachers’ Pensions Under Attack!


The key issues
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
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
PAY MORE Contribution rate rise (3.2%)


Pay more tiered contribution rates
Pay More‘Tiered Contribution’ Rates


Pay more what this means for a beginning teacher
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
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
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
GET LESSthe ‘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
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
‘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 £21,588 1/60th

1 year’s service x salary of £23,925 1/60th

for each year of service

(Past years’ salaries increased with inflation – CPI?)


Get less career average v final salary
Get Less: Career Average v Final Salary


Negotiated changes to the scheme in april 2007
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 1/60th 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
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
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
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
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
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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