Teachers pension, school is opting out

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Hi, my dh is a teacher and his school is opting out of the teachers pension scheme. He is mid forties so it will significantly affect his projection for retirement. It's such a shame as it is a school he probably would have stayed at until he retired as he really loves it.

I'm trying to be supportive and not just say leave and get another job as I know there are many considerations, the school is independent and he has nice class sizes and less planning he says than a state school. Not least his salary potentially could be less, he is on about 45k.

Is there another way of mitigating the loss of the contribution? Perhaps investing a few hundred pounds a month into something else ? Or should he just look for another job, state sector with the TPS pension?

Thanks

Are they fully excluding the option of TPS, or allowing you to continue and sacrifice salary to stay in? My employer have done the latter. I have a large amount come out at gross level and have remained in the TPS. I think they pay the first 10% and then I pay the employer top up and then the employee % as well. Independent financial advice said this was still more beneficial than investing it elsewhere. Guess only downfall would be if the benefit changes significantly enough by the time I come to retire.

This is happening at most independent schools. The contributions for teachers in the state sector are centrally funded but not for independents , it’s simply unaffordable . That said there is no way you would be able to replicate the TPS benefits especially the death in service element. So it’s about priorities, do you have a fee discount for your children, I think a lot of teachers will stay for that , the schools are offering an alternative scheme , at least one is claiming it’s defined benefit . You need to sit down with a financial advisor who specialises in the TPS ( this is important , as it’s different because it’s statutory and you need some one who really understands it) and weigh up the pros and cons of the package on offer. You can get an estimate of your Dh’s current pension on the TPS website , they gave lots of helpful calculators etc .

It’s not happening at most independent schools. Most who were in it 3 years ago still are. Those leaving are typically smaller schools or those facing more struggles. The larger schools are still in.

I would seriously consider looking for a job elsewhere. Look for a larger school in the independent sector and one with healthy numbers.

That pension is worth a lot.
Wha is the alternative he’s being offered? What % contribution will the employer pay? The key thing you lose is certainty of pension and it being index (inflation) linked and with spousal benefits too. Even with a good % being out into a new defined contribution pension, which is what the school will be offering, it won’t be as good. That money will be invested and subject to the vagaries if the stock market. At retirement, you either have to start drawing down and hoping the money lasts you out, or buy an annuity which gives you a guaranteed income for life. £1k of pension which is index linked and has spousal benefits will cost over £30k.

So I’d seriously consider looking elsewhere.
This is the impact schools have to face if they leave the pension. Staff will go elsewhere. Currently there are still plenty of other I depndnet schools offering the teachers pension. Don’t be told everyone has left. It’s not true.

Unionise. It has been successfully fought in many schools. The NEU have special advisors for this.

Yes, the GDST 23 schools have recently been on strike and prevented the withdrawal of the pension from existing staff. Other schools have succeeded too. Fight it. If you don’t keep it, look to leave.

Honestly, a 2 tier system is developing. We know where the best teachers will end up!

What is the alternative scheme he is being offered?

The school I am involved with is switching TPS for a 23% employer contribution into a DC. It is not about reducing the benefit for the teachers but eliminating the future unknown liabilities for the school. May not be the case at your DH's school but worth knowing how much he is actually giving up.

Definitely get the union involved and strike. This has been a successful tactic in a few schools in the East Midlands.

It’s not just about the % the school pay in. Defined contribution (new pension) is very different to defined benefit (old pension).

With the old pension you know what you will get….index linked for life and also with spousal pension. With defined contribution you know what you pay in, but not what you’ll get out. And typically to achieve a similar retirement income you’d need far bigger contributions - the 23% or whatever the school pay (and this could be cut over time) and current teacher contribution is Uni likely to lead to a retirement income anywhere near the teacher pension. It’s why people are fighting tooth and nail and teachers should resist.

The fact that a good number of schools have done so successfully should encourage people. Most independent school teachers aren’t militants. The idea of striking is horrible to them and schools hope this will be the case and they will roll over and accept the significant reduction in pension. But they don’t have to and of course staff can leave too. It’s important not to be passive.

Of course it’s especially bad for younger staff who haven’t accumulated much in the existing pension.

Thank you so much all for your detailed advice, unfortunately the school is small and other schools have closed in the city, the other major independent has withdrawn from the TPS and this is a hugely successful school, they just don't give a fuck !

We actually have withdrawn our children from the school for other reasons and my dh is stepping down from a major role which was to concentrate on his department! I actually think he will look elsewhere, the schools finances have been going south slowly for the last decade so it's no surprise that this had happened I guess. The management could not care less about the staff and the head is leaving soon.

I think he will be looking for a role over the next few years and fingers crossed will find one that will be right for him.