Latest news with #TeachersPensionScheme
Telegraph
5 days ago
- Business
- Telegraph
Taxpayers forced to pay extra £900m to retired teachers
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.'
Yahoo
16-06-2025
- Business
- Yahoo
Civil Service blows £239m of taxpayers' cash on ‘failed' pension administrator
Taxpayers will foot a £239m bill for a new civil servants' pension scheme administrator despite the company's 'failing' track record, its critics have said. Outsourcing giant Capita will run the Civil Service Pension Scheme from December, which involves handling £7bn in pension contributions and making payments of almost £8bn a year to retirees. However, the Cabinet Office has already withheld almost £10m in contractual payments after the company missed vital deadlines while taking over from the scheme's current administrators, a National Audit Office (NAO) report said. Capita previously administered the Teachers' Pension Scheme for 27 years, but Government officials opted to switch to a new provider in 2023 amid a string of delays. Earlier this year it emerged teachers had been left waiting months for pension payouts, while some were unable to file for divorce due to administrative failures. Capita said at the time that it was experiencing delays in calculating cash equivalent transfer values, which provide a cash value for the pension someone has built up and are often requested by people transferring it elsewhere or getting divorced. The provider is now facing legal action over the backlog. There are 1.7 million members of the Civil Service Pension Scheme, which has almost £189bn in pension liabilities. The seven-year contract was awarded in November 2023 and Capita will take over running the scheme from December. The terms include a two-year transition from the current administrator MyCSP. However, MPs said Capita had already missed three of its six milestones during the transition period, and the Cabinet Office subsequently withheld £9.6m in payments. In its role, Capita will be required to maintain members' records, calculate and pay pensions, manage contributions and deal with queries from members and employers. The outsourcing giant will now operate a simplified IT solution to avoid further delays, reducing the service offered to both scheme members and employers until at least March 2026, the NAO said. Capita previously spent 27 years running the Teachers' Pension Scheme, beginning in 1996. It received multiple renewals that cost taxpayers more than £170m, but the Department for Education handed the new 10-year £223m contract to Indian IT company Tata in June 2023. Last year Capita also lost its £107m contract for managing SATs tests. Shimeon Lee, of the TaxPayers' Alliance said: 'It's hard to believe that such a massive pension scheme has been handed to a company with a track record of losing contracts. 'While Civil Service pensions do desperately need reform, it's vital that the system itself is robust and efficient. The Cabinet Office must get tougher on poor performance and handing taxpayers' cash to failing contractors who can't deliver.' A Capita spokesperson said: 'Capita is proud to be working in partnership with the Cabinet Office to modernise the administration of the Civil Service Pension Scheme from December 2025. 'While the NAO report reflects the status of our transition to scheme administrator in May, we have since met the referenced milestones and are on track to deliver enhanced, innovative services for members for when the contract commences. 'We remain committed to offering seamless, tailored experiences to all Civil Service Pension Scheme members.' The Cabinet Office was contacted for comment. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Telegraph
16-06-2025
- Business
- Telegraph
Civil Service blows £239m of taxpayers' cash on ‘failed' pension administrator
Taxpayers will foot a £239m bill for a new civil servants' pension scheme administrator despite the company's 'failing' track record, its critics have said. Outsourcing giant Capita will run the Civil Service Pension Scheme from December, which involves handling £7bn in pension contributions and making payments of almost £8bn a year to retirees. However, the Cabinet Office has already withheld almost £10m in contractual payments after the company missed vital deadlines while taking over from the scheme's current administrators, a National Audit Office (NAO) report said. Capita previously administered the Teachers' Pension Scheme for 27 years, but Government officials opted to switch to a new provider in 2023 amid a string of delays. Earlier this year it emerged teachers had been left waiting months for pension payouts, while some were unable to file for divorce due to administrative failures. Capita said at the time that it was experiencing delays in calculating cash equivalent transfer values, which provide a cash value for the pension someone has built up and are often requested by people transferring it elsewhere or getting divorced. The provider is now facing legal action over the backlog. There are 1.7 million members of the Civil Service Pension Scheme, which has almost £189bn in pension liabilities. Six missed milestones already The seven-year contract was awarded in November 2023 and Capita will take over running the scheme from December. The terms include a two-year transition from the current administrator MyCSP. However, MPs said Capita had already missed three of its six milestones during the transition period, and the Cabinet Office subsequently withheld £9.6m in payments. In its role, Capita will be required to maintain members' records, calculate and pay pensions, manage contributions and deal with queries from members and employers. The outsourcing giant will now operate a simplified IT solution to avoid further delays, reducing the service offered to both scheme members and employers until at least March 2026, the NAO said. Capita previously spent 27 years running the Teachers' Pension Scheme, beginning in 1996. It received multiple renewals that cost taxpayers more than £170m, but the Department for Education handed the new 10-year £223m contract to Indian IT company Tata in June 2023. Last year Capita also lost its £107m contract for managing SATs tests. 'Track record of losing contracts' Shimeon Lee, of the TaxPayers' Alliance said: 'It's hard to believe that such a massive pension scheme has been handed to a company with a track record of losing contracts. 'While Civil Service pensions do desperately need reform, it's vital that the system itself is robust and efficient. The Cabinet Office must get tougher on poor performance and handing taxpayers' cash to failing contractors who can't deliver.' A Capita spokesperson said: 'Capita is proud to be working in partnership with the Cabinet Office to modernise the administration of the Civil Service Pension Scheme from December 2025. 'While the NAO report reflects the status of our transition to scheme administrator in May, we have since met the referenced milestones and are on track to deliver enhanced, innovative services for members for when the contract commences. 'We remain committed to offering seamless, tailored experiences to all Civil Service Pension Scheme members.'
Telegraph
05-06-2025
- Business
- Telegraph
Teachers' gold-plated pensions are about to be exposed as a Ponzi scheme
The Teachers' Pension Scheme is the second-largest of the 'unfunded' public sector pension schemes, behind the NHS. Like all the gold-plated public sector pensions, it offers a guaranteed, fully index-linked 'defined benefit' pension. Like all the other unfunded schemes, there is no pot of money funding it – the money contributed towards these pensions over the years has been spent, not saved. Spent, by the way, on anything the Government of the day fancied at the time. In essence, there is a raid every year on these funds – just like Robert Maxwell did when he illegally plundered the Mirror Group's staff pension fund. But when the Government does it, it's entirely legal because it makes the rules. You might imagine that, seeing as there is no fund, the Government would not bother to calculate what they should have put in it. But there is a whole industry devoted to just this – charging public sector employees and employers for the fund-that-never-was. All paid for ultimately by the Government itself, which means you and me. Except in the case of the Teachers' Pension Scheme, taxpayers aren't the only ones funding it. Private schools are also eligible to enrol their teachers on the state-backed scheme.
