What will the pension changes mean for you?

Teachers’ Pensions currently go up each year in line with increases in the Retail Price Index. From April the Government wants them to increase in line with the Consumer Price Index. On average it measures inflation at 0.7% less per year. Over the average lifetime this knocks £70,000 off the value of a £20,000 per annum pension.

Osborne had already a assumed a 3.5% contribution increase phased in from 2012 as part of his Budget package to reduce public spending

Effect of 3.5% extra

• £61 per month for NQ teachers

• £102 per month for UPS3 teachers

Normal Pension Age will be 65 for future service for all teachers as soon as the scheme can be changed. After which, the Normal Pension Age in the new scheme will rise so that it is in line with their State Pension Age”  i.e.:

• 66 by 2020 or earlier (for teachers who are 56/57 now)

• 67 by 2036 or earlier (for teachers who are 40/41 now)

• 68 by 2046 or earlier (for teachers who are 30/31 now)

You will get less.  A lot less. 

• Indexation - RPI to CPI

– breaches “accrued rights” promise

– reduces the total value of your pension by 13-14% over an average lifetime

• Raising Normal Pension Age

– If you are 50 year now on UPS3 and in the scheme before 2007 then retiring at 60 you would lose £1500 per year

• “Career average” not “final salary” pension

– Further reduces the value of the pension of any promoted teacher. Each year’s salary re-valued in line with average earnings

To calculate what you will lose go to the NUT’s ‘Pension Loss’ Calculator at :

http://www.teachers.org.uk/pensions