Taxpayers subsidise pensions of private school teachers

Investigations Editor

Sunday 7 October 2012

MORE than 3000 private school teachers in Scotland will cost the taxpayer millions of pounds by piggybacking on to a lucrative final salary state pension scheme.

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EXCLUSIVE BY PAUL HUTCHEON

The Sunday Herald can reveal the public purse is subsidising the retirement nest eggs of teachers at the country's most elite schools, including Fettes and Gordonstoun.

Teachers in local authority schools pay their pension contributions into the Scottish Teachers' Superannuation Scheme. Members of the scheme pay between 6.4% and 8.8% of their wages into the pot, while their council employer pays 14.9%. In return, the state school teachers get a pension linked to their final salary.

Supporters argue that such taxpayer-funded pension deals compensate for public-sector workers getting relatively modest wages.However, despite it being a public-sector scheme, STSS also takes in the pension contributions of teachers in the "independent" sector.According to the Scottish Public Pensions Agency, 3441 private school teachers are currently paying into the state pot. These teachers pay the same individual contributions as their colleagues in the local authority sector, while the private school employing them pays the 14.9%.But unlike other workers in the private or charitable sectors, the cash goes into the STSS, not a more volatile private scheme.The arrangement leaves these teachers in a highly beneficial position. They have the opportunity of earning higher salaries than state school teachers but also gain access to a final salary-linked pension, guaranteed by the Government, which is more generous than most pensions available in the private scheme, many of which have now severed any link to final salary.Green MSP Patrick Harvie described the arrangement this week as a "bizarre and unreasonable" perk.According to the Scottish Council of Independent Schools (SCIS) website, "most independent schools pay teachers slightly above the national pay scales".The pension status quo is also a massive boon for the private schools which, unlike other employers, do not have to set up their own schemes.Sarah Phillips, a pensions expert at legal firm Burness, said independent school teachers got a better deal than most in the non-state sector. "This pension deal would be considered generous in the context of where we are now for other private-sector employees," she said. "Most private-sector employers do not offer final salary schemes."The biggest benefit is the security. If you are a member of a private scheme, you are always taking a risk on the solvency of that employer. That's not a problem with a public-sector scheme. And most public-sector schemes also have very generous benefits, such as on early retirement."Last year, a Government report into pensions by Lord Hutton concluded that it was "undesirable for future non-public service workers to have access to public service pension schemes".Responsibility for implementing the Hutton plan north of the Border is a matter for the Scottish Government.Green MSP Harvie said: "It seems bizarre and unreasonable that the public purse is underpinning the pensions of private school teachers."This system is designed for local council teachers who serve the public good and I'm sure parents at these schools will be surprised that much richer private schools can benefit from it as well."Central Scotland SNP MSP John Wilson said: "The situation that teaching staff in the private sector benefit from the public-sector pension scheme is another example of the public purse subsidising private education. It is now time for a serious examination and overhaul of what subsidies, directly or indirectly, the private education sector receives from the taxpayer."John Edward, the director of SCIS, said: "In independent schools, it is worth remembering that both employer and employee contributions represent new money into the scheme. "Teachers, irrespective of their schools, have always been part of the same system, as part of a single profession in Scotland; the skills in one part of the sector are the same as in the other."Martin Freedman, head of pay, conditions and pensions at the Association of Teachers and Lecturers (ATL), a trade union representing many private school teachers, said: "If teachers and heads were expelled from the STSS, some independent schools may close, others would have to hike their fees to be able to fund their own pensions for their staff, and they would be likely to lose staff to state schools." A spokesman for the Scottish Government said ministers were content to allow private school teachers to pay into the STSS, adding: "Negotiations between the Scottish Government, employers and teachers' representatives are ongoing. We hope to have concluded them successfully by the end of the year in order to have sufficient time for implementation."

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Taxpayers subsidise pensions of private school teachers

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