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TPS and the independent sector?

Discussion in 'Independent' started by trinity0097, Apr 20, 2011.

  1. trinity0097

    trinity0097 New commenter

    Our bursar was very concerned by it all and felt that it may be uneconomical to continue to pay into the TPS considering that they already have to pay more as an employer for us than they do in the state sector. If enough independent schools got together perhaps an alternative scheme for independent schools could be brought together?
     
  2. I am interested in working for the private sector. There's a possibility come up at a school but they say they don't pay into the TPS. Is that really bad, or standard?
     
  3. florian gassmann

    florian gassmann Star commenter

    The majority of independent schools pay into the TPS, but some of the larger ones operate their own stakeholder-type pension schemes. You would do well to find out what arrangements this school makes for pensions, and how any benefits you may have already accrued in the TPS will be transferred.
     
  4. Ravena

    Ravena New commenter

    Florian, as a general rule, how do these stakeholder pensions comapre to the TPS? I have an interview coming up for an indy school and my letter mentioned they have their own pension scheme.
     
  5. florian gassmann

    florian gassmann Star commenter

    No general rule, I'm afraid, so you'll need to ask for details of the scheme concerned.
    However, the TPS has (until recently) been very generous, so I doubt that many private schemes would be much better.

     
  6. The Report says: 'Ex.35
    As for the categories of people who should in future be entitled to join public service
    <font face="AGaramondPro-Regular">
    pension schemes, it is ultimately for the Government to decide how much pensions risk it is

    willing to bear in order to meet its wider policy objectives. While continuing access to public

    service pension schemes helps to remove the pensions barrier for external contractors, there

    are good reasons for the Government to limit access, including the increased long term risk

    government would bear in relation to those schemes.'
    So if you are already a member of the TPS you might be able to keep building up years of service. Or they might freeze it so you keep what you have already got in terms of years of service in the TPS but you can't build up any more years of service (unless you change move to a state school). On the face of it, it does appear unfair for teachers in independent schools to enjoy the benefits of the TPS, which is after all a public pension scheme. I suppose the justification for allowing independent school teachers to access the TPS was that it made movement betweent the two sectors easier. One result of closing the TPS to independent school teachers may be that teachers will be less willing to move from the state sector to the independent sector, and that posts in the independent sector may lose some of their attraction.
    </font>
     
  7. So given that teachers pay into the scheme, and the school pays into the scheme, what - if anything - does the government pay into the scheme? Or for that matter, what ownership do they have in it?
    Surely the more money they have to play with the better the returns would be?
     
  8. TheoGriff

    TheoGriff Star commenter

    Pooky, the point is that the TPS is a Ponzi scheme at heart. The contributions from current teachers and employers are not invested to get money to pay your pension in the future. Current contributors are paying for current pensioners but with a large top up from the taxpayer. So nothing has been put aside for you in the future. And in addition, the Final Salary element is basically unfair. Unfair because it gives pensions, subsidised by the taxpayer, that do not reflect the contributions actually paid by the teacher. For example, someone on top of scale for 20 years who gets salary doubled for last 5 years by promotion to Deputy Head. In private sector the pension would be based on 20 yrs contribution at 30K and 5 yrs contribution at 60K. That.s fair because that.s what has een contributed. But the teaching Final Salary scheme is unfair because in my example they get a pension based on 30 yeas contribution at 60K. A contribution that they havent , made. The diffeerence is paid by he taxpayer in ggeneral. It would be fairer if the pension was calculated on average salary with allowances made for inflation because your salary 20 years ago was worth more then.What it boils don to is that private sector employees are paying more in taxes in order to give public sector employees a pension worth roughly double what a private sector employee would get from that monthly contribution. Of course the teaching unions are ipposed to any Attack On Pension Rights. Even in thhr form moddified for new joiners 3 or 4 years ago, and even after the rise in contributions last month,the TPS is extremely generous. Generous because it is subsidised by the general taxpaters who have less generous systems. And, yes, I benefit from it. Both as a Final High Salary retiree and as soomeone who is receiving money from current teachers and taxpayes. Thak you for that! But it is still both a Ponzi and an unfair system. As a Ponzi it might crash. As an unfair system perhaps it shhould . . . .
     
  9. TheoGriff

    TheoGriff Star commenter

    Sorry. Pecking away on a tiny screen I cannot read what I type. 20 years plus 5 years in my example gives 25 years not 30. So they would get a pension based on a contribution on 25 years at 60K, a contribution they didn.t make. In trying to give a simple example I may well have confused you further! I will add hat indy schools being in the TPS is considered extra unfair because the taxpayer is subsidising pensions that otherwise should be paid for by parents paying higher fees.
     
  10. Sorry, Theo, but I think you have departed from your normal well-informed and balanced views on this one.
    It is misleading to liken the TPS to a Ponzi scheme. In the latter, an investment fund pays out interest/dividends from new capital invested (the scheme manager having spent the initial capital.) While new investments keep coming in the Ponzi scheme works well. Problems arise when new investments stop. But with the TPS there will always be children so there will always be teachers with their new contributions. It makes sense for the government to spend the initial capital, investing it in the infrastructure of the country.
    Since the TPS was altered about 4 years ago the contributions should now be sufficient. This is why they were increased. (And there is the other point - why are we looking at monetary contributions only? A lifetime of teaching is a pretty big contribution.)
    Changing to a lifetime average is the only change which would support. A headteacher should, arguably, receive a greater salary than a classroom teacher. But after retirement the Head is doing exactly the same as the non-head, i.e. nothing. A large difference in pensions is not justifiable.
    Is the TPS extremely generous? I'll be getting less than &pound;1000 a month after 32 years of teaching.
    At the moment there is a ready supply of new teachers to the profession. This is because we are mid-recession. Once the recession ends there will once more be a shortage of teachers. What is not paid as a pension subsidy will have to be spent on salaries. Supply and demand is universal. So the governement will find itself paying out money one way or another.
    What I am waiting to see is the response of teachers in the independent sector to the Unions' strike call. Although not employed by the government, these teachers are responsible for teaching the children of most government ministers. Interesting situation.
     
  11. I heard that the proposed increase to the contribution is about &pound;100 per month. That is about half of what I pay now. Plus getting less at the end.
    If they stop independent teachers contributing, then the amount of money into the TPS will decrease. So they will have less to pay out to existing pensions - which presumably won't be affected as they already are being paid. I realise that the amount contributed by independent teachers may not be much in relation to the amount contributed by all the State teachers, but it must go someway. Otherwise the state teachers are going to have to contribute even more to pay teh existing pension bill, one would have thought.
    We have someone coming to talk pensions to us later this month. Maybe by then we will know more.
    I wonder what will happen with the proposed strike in the indy schools. Ours is just about all ATL. I wish I had confidence that a strike would actually do anything. It certainly didn't when the university lecturers went on strike earlier this year over pension changes.
    Would it be possible for all the indy schools in the TPS to buy into/set up an alternative pension scheme, if the worst came to the worst?
     
  12. TheoGriff

    TheoGriff Star commenter

    Personally I can&acute;t see much difference between the TPS and a Ponzi scheme.
    Instead of the money that YOU put in being invested for YOU, it goes to others. To ME for example!
    The net outcome is the same; YOU have no guarantee that there will be a pension. And there may always be children, and perhaps teachers (or internet-based home/group schooling for all?).
    But there is no guarantee that there will always be a TP scheme that those teachers pay into when YOU are retired.
    But I agree about the unfairness of the Final Salary scheme.
    _____________________________________________________________
    TheoGriff. Member of the TES Careers Advice Service.
    I do Application and Interview one-to-ones, and also contribute to the Job Application Workshops. We look at application letters, executive summaries and interviews, with practical exercises that people really appreciate.
    The next Job Seminar on Saturday 14th May:
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    The next Moving onto Leadship seminar is Sunday 15th May

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    E-mail Julia on advice@tsleducation.com for how to book a meeting with me personally.
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  13. florian gassmann

    florian gassmann Star commenter

    According to the DWP, half of all pensioners on a private pension scheme received less than &pound;170 per month from their scheme in 2008/9.
     
  14. 'Instead of the money that YOU put in being invested for YOU, it goes to others. To ME for example!'

    I don't think thats really the case, because all the money for retired teachers in the TPS is actually coming from general government revenues. Money that current teachers pay into the TPS is just going into general government revenues. It almost sounds like Theo is repeating what was said on the moneybox special programme on final salary schemes on Radio 4, however that was quite clearly about private sector final salary schemes, not public sector ones, and the presenter himself said at the end that public sector defined contribution schemes still made sense.
     
  15. Sorry that last sentence should have been 'public sector defined benefit schemes still made sense.'
     

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