Last year, the Commons Public Accounts Committee highlighted the cost to the Teachers' Pension Scheme of premature retirement and urged the Government to take action. That is hardly surprising when one considers that the 13,000 teachers who took premature retirement last year will cost the taxpayer pounds 480m. That is both an abuse of the pension scheme and a diversion of resources away from frontline education.
If we left the current arrangements for premature retirement in place, the Government Actuary's report shows that a significant rise in employers' contributions would be needed now, and contributions might have to double by the early years of the next century. Under our proposals, we can avoid such rises. The Government is required, by law, to implement the Government Actuary's recommendations, so the status quo - leaving contribution rates unchanged - is not an option.
The Government Actuary's report also shows that if we transfer the cost of premature retirement from the scheme to employers, we can reduce the employers' contribution rate. That will release funding to enable employers to meet the cost of premature retirement without affecting other programmes. We believe that this is the most sensible way of making employers accountable for their decisions on premature retirement.
Under the current arrangements, the costs of premature retirement are pooled among all employers of teachers. So a school or college may make no premature retirements or it may make dozens, but it will pay the same contribution rate in either case. That does not encourage employers to behave prudently, and they have not done so.
Under the new arrangements, since employers will have to pay the extra cost of each premature retirement as and when they make it, they will make more considered, prudent decisions. It must surely be right that when an education institution takes a management decision, it should also be responsible for the financial consequences of that decision.
Schools can currently make budget savings by granting premature retirement to older teachers and taking on younger teachers who cost them less in salary. But that arrangement takes no account of the cost to the public purse of premature retirement. Once that cost is taken into account, there is no overall saving when a teacher is granted premature retirement. The new arrangements will make that apparent to employers.
Many of the teachers' unions and others have been saying that we want to end premature retirement completely. That is nonsense: the budget settlement is based on a 25 per cent reduction in numbers of premature retirements for school teachers in 1997-98. And the planned numbers in further and higher education are around historic levels. There will still be plenty of scope for premature retirement where this is necessary.
So it is a myth that "burnt-out" teachers will be trapped in our schools, ruining the quality of education in them. At present, only one in five teachers stays until age 60. It is not credible to believe that the remaining four out of five teachers are all incapable of teaching effectively until they reach 60.
Of course, there have been big changes in education, and for the better. Teachers have had to cope with a lot of change, but it is ludicrous to assert that the result is that four out of five of them cannot cope once they reach their fifties. It is particularly indefensible when teachers who have taken ill-health retirement reappear a few days later as supply teachers. We are determined to put a stop to that abuse - teachers are either too ill to teach or they are not. A teacher can't retire on Friday and start teaching again on Monday morning.
We have been accused of conducting a "sham" consultation. We announced the consultation on 22 October, with 12 weeks for consideration by consultees. Because of the wide interest in these proposals, we have also made a summary available to members of the public. I will take final decisions only after 17 January, when the consultation is complete.
There have also been complaints that we are introducing these changes too quickly. In fact, the Government is required to implement the recommendations of the Government Actuary - which form a key part of these proposals - from 1 April this year. It is foolish to suggest that the timing is somehow connected with the fact that we are in the last session of this Parliament.
What these reforms will achieve is to put early retirement back on a sensible, accountable footing. I do not believe we can afford to let them fail.
The writer is Secretary of State for Education and Employment.Reuse content