Pensions Update - Teachers
- Firstly, both the Coalition Government and the Scottish Government are formally consulting on changes to pension regulations on contributions increases.
- Secondly, the Coalition Government has, following progress in overarching discussions with the TUC, set out "final” proposals in 4 schemes including the Teachers' Pension Scheme which applies in England and Wales.
To date, the Scottish Government has not opened discussion on long term pension scheme redesign. There are no proposals for teachers on the table in Scotland, which is not bound by the same pension scheme design as England and Wales. However, any scheme which may be agreed between Scottish Government and unions is subject to the approval of HM Treasury.
Contribution Increases
The Scottish Government has issued a consultation document to amend teachers' pension regulations to introduce increases in contributions for 2012-13. These increased contributions will come into force from 1 April 2012 and are applied on a tiered basis.
|
Full-time equivalent Contributable Salary Band |
Contribution Rate from 1 April 2012 to 31 March 2013 |
Change |
|
Below £15,000 |
6.4% |
0 |
|
£15,000 to £25,999 |
7.0% |
+0.6% |
|
£26,000 to £31,999 |
7.3% |
+0.9% |
|
£32,000 to £39,999 |
7.6% |
+1.2% |
|
£40,000 to £74,999 |
8.0% |
+1.6% |
|
£75,000 to £111,999 |
8.4% |
+2% |
|
£122,000 and above |
8.8% |
+2.4% |
The Scottish Government has decided to adopt the bandings for tiered contributions that will apply in England and Wales. To date, the Scottish Government has not consulted on increases in scheme contributions for 2013-15.
Proposals relating to the Teachers' Pension Scheme (England and Wales)
- a Pension Scheme based on career average, rather than final salary
- an accrual rate of 1/57
- annual benefits in a career average scheme will grow in accordance with the Consumer Price Index (CPI) plus 1.6%.
- scheme pension age to be same as the state pension age subject to transitional arrangements
- pensions in payment will be uprated by CPI
- members' contributions will be, on average 9.6% (as opposed to 6.4% at present)
- current benefits relating to ill health, death in service and spouse/partner benefits will be retained
- there will be a cap on employer's future contributions levels.
Teachers in England and Wales, who, as of 1 April 2012, are within 10 years of their retirement age, have been offered a transitional protection to retain their current pension age and pension arrangement (although they will have to pay contribution increases). Those who are within a further 3.5 years of their pension age on 1 April 2022 will have a tapered arrangement to provide entry into the new pension arrangements.
At this point, since there have been no discussions with the Scottish Government it is not possible to predict whether a similar offer and protection will be offered to teachers in Scotland.
Local Government Pension Schemes
During the summer the Cabinet Secretary for Finance, Employment and Sustainable Growth, John Swinney stated that, unlike the Teachers' Scheme and Health Scheme, the Scottish Government would leave decisions on contribution increases to each of the local government schemes. We believe that COSLA is opposed to increases in scheme contributions and to date no scheme in Scotland has brought forward proposals for increases in scheme contribution.
