Magazine article Times Educational Supplement

Young Guns Don't Go for It: Sharp Rise in Pension Opt-Outs

Magazine article Times Educational Supplement

Young Guns Don't Go for It: Sharp Rise in Pension Opt-Outs

Article excerpt

Numbers leaving scheme jump by a fifth in a year, as unions warn of 'bleak retirements' and 'pensions crisis'

The number of teachers opting out of the profession's pension scheme has increased by a fifth in a year, figures seen by TES reveal.

Experts are warning that a growing band of young staff are jeopardising their financial futures by missing out on thousands of pounds of employer contributions to their retirement funds.

Unions fear that the trend will have a "damaging" effect on the profession and the Teachers' Pension Scheme (TPS).

The number of teachers who deserted the scheme between April and June this year increased by 19 per cent compared with the same period in 2015, the latest opt-out statistics show.

And more than half of the teachers who quit the scheme between April and June 2016 were 34 or younger. Unions say that higher levels of student debt, steeper teacher pension contributions and low pay are driving these younger teachers to opt out.

High debt and low pay

Usman Gbajabiamila, pensions policy adviser at the ATL teaching union, said: "The concern is that the majority are young teachers. Once they opt out, they very rarely come back on again. We want young teachers to opt in as it's a pay-as-you-go scheme."

Three-fifths of teachers who chose to opt out of the scheme did so because of "personal financial reasons", the official figures show. And unions fear that teachers' financial pressures will get worse.

Andrew Morris, head of pay and pensions at the NUT teaching union, said: "This year's cohort is likely to be even more tempted to opt out than their predecessors as they have bigger student debts to be repaid."

In total, there were 1,717 opt-outs from April to June this year, compared with 1,442 during the same period last year. And in July, the level of non-contributors reached its highest point since September 2010, with more than 700 leaving the scheme, according to TPS data shared with unions.

Chris Keates, general secretary of the NASUWT teaching union, said the figures should serve as a "wake-up call" to the government "about the damaging and potentially serious long-term financial implications its attacks on teachers' pay and pensions will have on the profession".

She added: "It would be highly regrettable if short-term decisions to opt out of the TPS in favour of cheaper pension arrangements, or no pension at all, resulted in teachers facing the prospect of a bleak future in their retirement."

When higher teacher pension contributions were introduced in 2012, unions warned that more teachers would leave the scheme. Now their fears have been realised as the numbers opting out have continued to rise since then. …

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