My Gold Plated Pension?!
Cheryl, a retired teacher, tracks her pension contributions and looks at why, after retirement, her pension income is shockingly low.

By Cheryl

After leaving Lancaster University with a 2.1 (Hons) in 1981, I immediately did my Postgraduate Certificate of Education for secondary school, qualifying in 1982. I followed this up with an M.A. in 2002.

From 1983 to 1999 I taught full-time as a class teacher and head of department (moving up the scale). Motherhood beckoned, I went on maternity leave on the day new snow fell in 1988. I had three children in less than four years.

We lived in Lincolnshire at the time and, having no relatives nearby and a truly obstructive and draining husband, I had no support system, plus the drive to and from work took an hour each way across the Lincolnshire Wolds. There was no other way than to resign my teaching position; this I did in March 1989. I was still breastfeeding. I would have liked to teach part-time and tried to negotiate but was refused even though the school begged me to stay (there was then no legal right to be considered for part-time work).

In 1990 I was offered a full-time head of department job covering maternity leave for two months, just a twenty-five minutes’ drive from home. I employed a child minder to the house, took the post and was very busy but happy until the final day of term when the permanent head of department returned and I thereby lost all my holiday pay – with its pension contributions lost also.

I learned that my 1983-1991 pension contributions would not count towards a widower’s pension should I die before my husband.

After this double blow I settled to the only way I could to maintain my career, aware that the children would need me in an emergency or if they were not well. It would be unfair to school and pupils for me to be paid if they were ill, so I took unpaid leave. In fact, my child-minder always coped as I created an excellent situation in my home for all.

I next covered a deputy head’s timetable for two years but was paid on a supply basis for this work. I worked full-time at first and later minimally three and a half days per week and continued until 1997 with no pension contributions allowed even though I did all the types of work that a teacher in a large comprehensive school always does: lesson preparation, marking, reports, exams, pastoral care, parental evenings, staff meetings, OFSTED inspections and, as head of department, lesson plans for the teachers in my department.

From 1997-1999 I was permitted to pay into the teachers pensions scheme again. A class action I joined in the mid 2000s failed: out of time – under New Labour. My pension to come was downgraded from RPI (Retail Price Index) to CPI (Consumer Price Index). It is just under £250 per month – after nearly twenty years of continuous teaching.

My husband’s pension (in a non-teaching profession), started in the same year of 2018 at four times mine, after his 19 years (nearly identical to me) with the disadvantage of shifts, but no pension outside the 9-5 hours (so 40 per cent down). This year, my pension rose by just over £3 per month while his rose by nearly £100 per month. If I die before him, he will just get £400 a year from my ‘allowed work’ from 1997-1999. It was only in 2007 that all teachers received the right to pay pension contributions but agency work threatens this.

Cheryl’s is an individual experience but could be multiplied many times. Many employers find it lucrative to change the final salary pension their employees have contracted into to a money purchase scheme which Kathryn explains below. There have been many occasions when employees have, against their better judgement, accepted an outcome whereby they can stay in the final salary scheme but allow for new employees to pay into a money purchase scheme. Kathryn writes about such a compromise reached at a private school trust.  

A series of unprecedented one-day strikes by teachers employed by Girls’ Day School Trust (GDST) Schools took place earlier this year, attracting a good deal of media attention. The striking teachers are members of the National Education Union (NEU). GDST is an independent, fee-paying chain which runs around 23 schools across England, from the Northwest of England to Portsmouth’s High School for Girls, in Southsea. 

The spur to this industrial action was the decision by GDST to withdraw from the Teachers’ Pension Scheme (TPS), ie the occupational pension scheme which most teachers pay into, and to replace it with a Money Purchase Scheme. This did not sit well with the NEU because the Money Purchase Scheme is seen as an inferior scheme for reasons that need explaining, although it must be assumed that it cost the employer less. 

Put simply, the TPS is what is known as a defined benefits contribution scheme and is based on how much has been contributed to your pension pot and the growth of that money over time. It offers a set benefit each year after retirement, which doesn’t depend on investment performance and is usually based either on the final salary or a career average, as well as length of service with an employer. 

In contrast, a money purchase or defined contribution scheme, ‘plays the stock market’ and relies on investment performance for payouts; like all investments it can go up, or it can go down. Therefore the defined contribution scheme cannot offer a defined amount of pension income. 

So what happened to the striking teachers? After 5 day strikes in February and March 2022, they won the right to stay in the TPS, fought off a ‘fire and rehire’ threat and received a pay offer. However, the TPS is now closed to new GDST teachers, a decision that could negatively impact staff recruitment. At a time when the value of the State Pension is being diminished, it is vital that occupational pension schemes are defended from attacks by employers. 


Pensions: Horrible Statistics and a Couple of Thoughts 

  • 2/3 of women living in poverty are women ( National Pensioners Convention) 
  • The most you can get from the basic State Pension in the 2022/23 tax year is £141.85 a week. 
  • The amount you can earn tax-free each year, known as your personal allowance, is £12,570 in the 2022/23 tax year, meaning that if the State Pension is your only source of income, you won’t have to pay any tax on it. 
  • 5.5 million pensioners have such low income they don’t pay income tax. (Age UK) 
  • Pay gap between working-age men and women is 17%, but the pensions gap is 40% 

Grim statistics, aren’t they? And many OFN members worked part-time, at one or more jobs, during a decade when part-time work wasn’t pensionable, even if you were in professional careers like teaching. 

Let’s encourage younger women to jolly well sort their pensions out before they get to 66, or 70, or whatever age the government of the day decrees you become a state pensioner. 

A bit more optimistically, the new website will encourage members who are on decent incomes to contribute a little bit more to OFN. And if you can get into London on the days of Millman st. meetings – its always been a very warm building, which is going to matter this winter! 



1 Comment

  1. I understand why Hilary thinks we should be encouraging individual young women “to sort their pensions out”. But I think it would be better to advise them to join campaigns, protests and strikes to ensure a decent pension for all.


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