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Taxpayers forced to pay extra £900m to retired teachers

Taxpayers forced to pay extra £900m to retired teachers

Telegraph4 days ago
Taxpayers have handed an extra £900m to retired teachers after the cost of their pensions hit almost £13bn a year, official figures show.
The average retiree received £17,750 in 2024-25, according to the Teachers' Pension Scheme's annual report, more than double the amount spent per school pupil.
Current teachers also received an extra 24pc in pension contributions, costing taxpayers £1.9bn more than the previous year.
It comes as strikes by the National Education Union took almost 600 teaching days away from schools last year.
Most members of the England and Wales Teachers' Pension Scheme are in state schools, but others work in participating independent schools, further education and higher education.
Their employer must pay pension contributions of 28.6pc on their behalf, but they contribute just 9.4pc on average themselves. In return, they receive a guaranteed, inflation-linked pension for life.
According to the report, the scheme spent £10.9bn on teachers' pensions, and just over £600m on dependant pensions last year. It also paid out £1.3bn in tax-free lump sums, taking the overall cost of pensions to £12.8bn, up from £11.9bn in 2023-24.
The average retiree received £17,750, up from £16,600 the year before. Per student spending for 2024-25 was £7,920 in England and £7,926 in Wales.
Liz Emerson, of the Intergenerational Foundation think tank, said 'unaffordable' teachers' pensions were putting children's education at risk.
She said: 'Spending on their education should not be curtailed by cutting resources in order to pay for these unaffordable final salary pensions.
'Our children's educations are at risk today due to the iceberg of pension liabilities hidden by profligate promises made in the past. Politicians of all parties should hang their heads in shame that they continue to allow these overgenerous pension promises to persist.
'One solution would be to offer salary increases for equivalent decreases in tax payer-funded pension contribution rates.'
Rising employer contributions
The cost of employer pension contributions for current teachers – funded by the taxpayer – also increased from £7bn to £8.9bn following a 5pc hike in the amount schools are required to pay in.
It was the latest in a series of increases to employer contributions necessitated by the rising costs of the scheme, which has now built up £291bn in pension promises.
Schools were previously asked to contribute just 16.5pc as recently as 2019, but the amount has since been increased twice to hit the current level of 28.6pc.
State schools are legally required to offer membership of the scheme, which left taxpayers footing the bill for an extra £1.25bn handed to schools to meet the increased cost of employer contributions last year.
However, private schools are free to withdraw or close it to new staff, leaving some experts to predict they will be driven out for financial reasons.
Hannah English, of pension advisors Hymans Robertson, said: 'As independent schools are facing increasing financial pressure, many schools – now over 400 – have opted out of the Teachers' Pension Scheme and around 300 have decided to stop offering it to new teachers.
'The question that independent schools are having to consider is, at what cost will they remain in the scheme? If staff are taking pay cuts – or facing possible redundancies – is this a price worth paying for a generous pension scheme?'
Matt Wrack, of the NASUWT teaching union, said: 'Pensions are deferred salaries to which teachers contribute a significant proportion of their income throughout their working life. Further attacks on teachers and other public sector workers would be outrageous and would be resisted.'
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