Teacher Union Gives Pension Proposals Variable Report

The SSTA, representing 8500 Scottish Secondary Teachers, today accepted much of the Independent Public Service Pensions Commission (the Hutton Report) but at the same time rejected one of the central proposals.

Speaking today in Edinburgh, SSTA General Secretary, Ann Ballinger commented on the report.

“Lord Hutton and the Commission members are to be congratulated on the scope, depth and readability of the Report. It contains wide ranging proposals which do substantially deal with all relevant issues and do provide a basis for an affordable but fair public sector pension strategy. The SSTA totally accepts that any pension system must be operated at an affordable level but points out that while the Government makes much of current funding costs, no such complaints were received when inflation ran into double figures and successive Governments were delighted to borrow employee contributions at interest rates hugely below those then prevailing.

“The Commission's Repost must, however, be seen in the current context of fund contribution rates. It is the Government's clear intent to raise employee contribution rates in three stages over the next few years. For teachers this would lead to a contribution rate of around 9.4% (or to put it in more stark terms, an increase of over 45%) at a time when wage increase will be nil or not much beyond that figure.

“In particular, the SSTA welcomes the confirmation that currently accrued benefits will be protected and that only contributions payable from some future date will be governed by any new mechanism.

“Where the SSTA does differ with the Commission is on the proposal that new benefits should be calculated on a career averaged salary basis rather than on the current final mechanism. The SSTA believes that significant increases to pensions caused by the larger salaries paid towards the end of a career should be financed (as the Commission partly accepts) by a tiered contribution rate. The SSTA totally rejects one clear error in the Report‘s conclusions which suggests that the final salary element of pension scheme design causes a barrier in labour mobility between public and private sectors. No such barrier is apparent.”

Welcoming large areas of the Commission's report, Mrs Ballinger added:

“The Commission accurately and decisively rejects many of the more extreme views provided in evidence particularly by those who see public sector pensions as no more than a drain on   resources rather than, as Lord Hutton points out, “an important element of remuneration”. The odious comparison with poorly performing private sector provision (which is no more than a comment on the skills of fund managers), is decisively rejected.

“The SSTA is delighted to take part in subsequent discussions (which the Report sees as essential) on any aspects of change to the design of public sector pension schemes.”

For further information contact:

Jim Docherty

Depute General Secretary

0131 313 7300

10 March 2011