It was for this reason that I spent this morning with a paper and pen going through the figures myself to try and quantify what was being proposed. The results are presented below.
Pension Benefits
Under the present arrangements for a teacher in the TPS (Teachers' Pension Scheme) who has 38 years until they retire and who earns the top rate of pay at retirement (U3 on the scale which is equivalent to £36,756) will receive £23,279 per year in retirement.
In documentation for the proposed scheme (since 2nd November 2011), the pension received per year for the same circumstances is given as £23,000 per year.
I am happy to believe that these two figures are the same (just with the latter rounded to the nearest thousand). My basis for this is that the unions appear to have negotiated an accrual rate of 1/60th rather than 1/65th as originally proposed. The accrual rate is 1/60th in the current TPS calculation. The original proposal would therefore have seen pension per year drop to approx. £21,500.
Pension Contributions by the Employer
These contributions remain at a rate of 14.1%.
Pension Contributions by the Employee
The tax-break on pension contributions remains but instead of a flat rate of employee contributions (set at 6.4%), the contributions will now be tiered with high earners contributing more whilst lowest earners see no change. I'll reproduce the table provided by the government's consultation document to demonstrate:
Lower
Salary
|
Higher
Salary
|
Contribution
Rate in 2012-13
|
Increase
(against 6.4%)
|
Membership
|
%
of member-ship
|
14,999
|
6.4%
|
0%
|
1,400
|
0.2%
|
|
15,000
|
25,999
|
7.0%
|
0.6%
|
116,000
|
17.1%
|
26,000
|
31,999
|
7.3%
|
0.9%
|
117,000
|
17.2%
|
32,000
|
39,999
|
7.6%
|
1.2%
|
271,000
|
39.6%
|
40,000
|
74,999
|
8.0%
|
1.6%
|
172,000
|
25.2%
|
75,000
|
111,999
|
8.4%
|
2.0%
|
4,000
|
0.6%
|
112,000
|
8.8%
|
2.4%
|
600
|
0.1%
|
So a teacher earning less than £15,000 will be asked to pay nothing more but once they hit that threshold they will be asked to pay £90 more per year.
From the above table I would say that the average teacher salary is about £35,000. In this case, they would be asked to pay £420 more per year.
At the top end of the scale teachers earning £112,000 would be asked to pay £2,688 more per year toward their pension.
Putting it into Perspective - the Private Sector Situation
We have already seen that teachers are being asked to contribute 6.4% to 8.8% toward their pension. The employer (i.e. The State) pays 14.1% toward their pension.
In my private sector job, I contribute 2.5% toward my pension whilst my employer contributes a further 2.5%. I consider this pension arrangement fairly typical.
I did some calculations but since I don't want to reveal my earnings and pension value you're going to have to trust me on this (or try it for yourself)...
If I put my current salary into the pension calculator on the TPS website I would get back about 3 times more pension than the forecast from my private sector pension scheme. Since I'd be contributing about 3 times more in the TPS, I think that this is about right.
In Summary
Employee contributions for teachers does seem high when compared to the private sector however the resulting pension is proportionately better. So you're getting what you pay for as I see it. The changes, in my opinion, do not greatly decrease the value for money being received.
Employer contributions for teachers are very generous when compared to the private sector. Whether this is appropriate and since it is not proposed to be changed, I will leave this open for debate - for instance, it could be considered that since we ask so much of teachers then the state should say 'thank you' in some way. I'm undecided.
Had the value of the pension reduced while contributions increased then I would have definitely opposed the proposals. Now, I'm not so sure. Some more perspectives would be useful...