Pension shortfalls could ruin teachers' early retirement plans

Pay and conditions
Three-quarters of teachers are considering early retirement even though many will have not saved enough towards their pension.

A snapshot survey of more than 300 teachers has found that while 75% plan to leave teaching before retirement age, 48% do not expect to have enough money to fund their retirement.

However, teachers in the survey were also confused as to the rules around phased retirement under the Teachers’ Pension Scheme (TPS).

More than a third (37%) of the respondents to the Wesleyan poll are planning some kind of “flexi-retirement”, whereby they will keep working in some form after they begin drawing pension benefits.

While a number of the teachers said they would keep working in order to have money for luxuries, 14% said they would be obliged to keep working in order to meet their basic needs in retirement.

The Retirement Living Standards – a guideline based on research by Loughborough University – suggest that an individual will need £33,600 a year in retirement to live comfortably. This means they will be able to cover everyday costs plus pay for some luxuries (such as holidays).

However, the average pension for a male teacher is £16,034 and £11,581 for a female teacher according to the 2020/21 TPS annual report (DfE, 2021). Headteacher Update has previously reported on the reasons for the gender gap in pension levels.

This would mean a shortfall in income of up to £22,000 in retirement. This shortfall will reduce to around £12,400 if the full flat rate state pension is paid from state pension age.

Teachers are automatically enrolled in the TPS if they are in a state-funded school or college. A large number of independent schools and other private sector employers also enrol teachers in the TPS.

However, the Wesleyan survey found confusion about the TPS and its provisions for phased retirement.

Phased retirement options give teachers the choice to access up to 75% of their pension benefits while still working and contributing to the scheme. However, respondents to the survey were unsure about the rules around working patterns and salary to access this.

Glen Roberts from Wesleyan said: “It is concerning to see that so many teachers are worried or confused about their retirement. The traditional concept of retirement as a time when people fully leave the world of work behind is becoming more and more outdated.

“Teachers are increasingly choosing to work in retirement. For a small but nonetheless significant proportion it will be a necessity so they can meet basic needs – a worrying finding.”

The research echoes findings of the NASUWT teacher pay survey 2021/22, which revealed that 22% of the responding teachers planned to take early retirement because of stress/workload pressures. A further 21% stated that they would retire early in order to have a better work/life balance (21%).