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Save our pensions! 

The Government recently announced that it would set up a Public Service Pensions Commission. This signals the start of the attack on your pension.

The commission is unnecessary. Public service pensions have already been reformed to make them sustainable. Following the 2007 reforms of the Teachers’ Pension Scheme, new teachers must wait until 65 for their pension, and all teachers are paying higher contributions. A cost-sharing agreement was also introduced, which covered what would happen if pension costs rose.

The commission, led by former Secretary of State for Work and Pensions John Hutton, plans to rip that up. The coalition says the commission is ‘independent’ – but ministers have prejudged the outcome by threatening higher contributions and higher retirement ages, regardless of whether these are desirable or necessary.

Opponents say public sector pensions are unaffordable, yet in previous years, when contributions have exceeded pensions payments, governments have simply kept the surplus.

Hutton is producing an interim report in September to look for short-term savings. There is a real risk that your pension contributions will be hiked. Hutton’s main report will be produced by March 2011 and will be a fundamental review of public service pensions. Yet National Audit Office projections confirm that the reforms already made mean the cost of these schemes will fall back to the current level of just over 1.5 per cent of GDP.

The NUT has already made a submission to the Hutton Commission setting out our arguments in detail. We will continue to work with other teachers’ organisations and the TUC to defend your pension. But teachers have to be prepared to fight to protect the Teachers’ Pension Scheme.

Why pensions matter

Your pension is one of your most valuable assets. As people live longer, having a decent pension enables you to enjoy a reasonable standard of living in retirement.

Your pension is an integral part of your pay package. It is deferred pay. A cut in your pension is a cut in your pay packet.

Though teachers have higher pensions than some groups in the public sector, the average pension in payment is less than £10,000 a year – far from the ‘gold-plated’ deals referred to in the media! A teacher’s pension is a fair reward for years of work in a graduate profession. And any attempt to cut it will have a greater effect on women, due to their lower average salary and length of service.

Private pensions

The real pension problem is in the private sector, where employers have used the recession as cover for abandoning their obligations to their workforce. Schemes have been closed and contributions slashed. Almost two-thirds of private sector workers are not members of an employer-backed pension scheme.

The Hutton Commission’s remit includes ‘the growing disparity between public service and private sector pension provision… including the impact on labour market mobility’. This gives the game away. The Government intends to sacrifice your pension to encourage people to move between the public and private sectors. Private pensions have been butchered by employers in a race to the bottom. Now they think it’s our turn.

Making teachers poorer will not make private sector pensioners richer. It will mean poverty in retirement for everyone – and the costs put back on society through the welfare system. We need decent pensions for all.

RPI to CPI

The Government is also attacking those already receiving their pensions. It plans to switch the indexation of pensions from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI) from April 2011. This will cost teachers tens of thousands of pounds – the RPI has averaged 0.8 per cent higher than the CPI for the past ten years. Over a 25-year retirement, a teacher starting with a £10,000 pension will receive £36,000 less because of the switch.

Before the election, the then Conservative Treasury spokesperson Phillip Hammond said the Conservatives had “no plans to change the current index-linking of pensions in payment”. Liberal Democrat Minister for Pensions Steve Webb said: “A promise made is a promise to be kept.” The promise lasted barely two months.

What this means to you

• A review of teachers’ pensions for the second time in five years.

• A cut to your overall pay package.

• Switching pensions indexing from RPI to CPI will typically cost teachers tens of thousands of pounds in retirement.

• The Government has already broken its pre-election promise on pensions.

Support the campaign:

• Write to your local MP and ask him or her to support the Teachers’ Pension Scheme, and defend public sector pensions.

• Take part in NUT and TUC campaigns to protect your teachers’ pension.

• Make sure your colleagues and friends know the truth – that public sector pensions are affordable and worth protecting.