Telegraph’s “£500,000 teachers’ pension pot” claim is wrong

The Daily Telegraph's claim today that teachers have a "£500,000 pension pot" is misleading and their calculations wrong, Left Foot Forward can reveal.

The Daily Telegraph’s claim this morning that “a typical teacher can expect to retire with a taxpayer-funded scheme worth more than £500,000” is misleading, miscalculated and ignorant of the facts. 

The misleading half-a-million-pound “typical teacher” pension figure distorts the actual level of public sector pensions by focusing on one of the better paid groups of public sector workers and assumes 37 years’ service. 

The paper assumes a pension of £24,000 – yet the average teachers’ pension in payment is £10,000, as shown in the scheme’s Resource Accounts. Furthermore, they assume a teacher who enters teaching at 23 and retires at 60 with a final salary of £32,000 will have a pension of £24,000. 

That assumption is wrong, as the simple calculations below explain: 

• A teacher who joined the scheme on or before December 31st 2006 gets 1/80th of their final salary per year of service plus three times this as tax free cash. 

• Their pension at 60 is (£32,000)X(37/80) = £14,800, + £44,400 tax free cash. 

• A teacher who joined the scheme on or after January 1st 2007 gets a higher accrual rate of 1/60th of their final salary per year of service, but this can only be taken in full at age 65; there is no automatic lump sum. 

• The pension available at 60 – including the current actuarial reduction factor of 0.753 – is (£32,000)X(37/60)X(0.753) = £14,859. 

• This is not a pension of £24,000. 

The Telegraph article also ignores the fact that teachers’ pensions are funded on a different and more secure basis than pension backed by annuities – their comparison is made to a pension secured by private sector annuity rates. This is misleading because the state does not need to operate in the same way as a private insurance company. 

This means administrative costs are lower, there is no need to factor in a margin for profit, and by definition the Teachers’ Pensions Scheme contains long and short-lived people. 

Of course, right-wing public sector bashing and fiddling of the figures is nothing new, as regular readers will be aware of.

49 Responses to “Telegraph’s “£500,000 teachers’ pension pot” claim is wrong”

  1. Stuart Alder

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  2. Sean Gittins

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  3. Martin

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  4. Caroline McAllister

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  5. Jill Hayward

    RT @leftfootfwd Telegraph's "£500,000 teachers' pension pot" claim is wro: //bit.ly/kjuJ7p reports @ShamikDas #J30 >> Brilliant!

  6. JamieSW

    RT @leftfootfwd Telegraph's "£500,000 teachers' pension pot" claim is wro: //bit.ly/kjuJ7p reports @ShamikDas #J30 >> Brilliant!

  7. Robert Long

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  8. David Munday

    RT @leftfootfwd Telegraph's "£500,000 teachers' pension pot" claim is wro: //bit.ly/kjuJ7p reports @ShamikDas #J30 >> Brilliant!

  9. marc foster

    Daily Mail (& govt) lies about teachers pensions exposed here //bit.ly/jEZSkV @leftfootfwd and here //bit.ly/mvav92 @ns_mehdihasan

  10. Robert Long

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //t.co/zrx46P1 LIES, DAM LIES & THE TELEGRAPH!!

  11. Brummie Protestor

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  12. TheKrumlin

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  13. Daniel Elton

    RT @leftfootfwd: Telegraph's //t.co/xpY3Ja9

  14. Daniel Elton

    RT @leftfootfwd: Telegraph's //t.co/xpY3Ja9 #J30

  15. Andy Gilpin

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  16. Amanda Kendal

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  17. David Christie

    RT @leftfootfwd Telegraph's "£500,000 teachers' pension pot" claim is wro: //bit.ly/kjuJ7p reports @ShamikDas #J30 >> Brilliant!

  18. Bern O'Donoghue

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  19. Niamh Foley

    Daily Mail (& govt) lies about teachers pensions exposed here //bit.ly/jEZSkV @leftfootfwd and here //bit.ly/mvav92 @ns_mehdihasan

  20. Andy S

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  21. Panda

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  22. Chris Stagg

    RT @leftfootfwd Telegraph's "£500,000 teachers' pension pot" claim is wro: //bit.ly/kjuJ7p reports @ShamikDas #J30 >> Brilliant!

  23. Matt Tancock

    Telegraph’s “£500,000 teachers’ pension pot” claim is wrong //bit.ly/iSGXNE

  24. Michael

    Telegraph’s “£500,000 teachers’ pension pot” claim is wrong – //tinyurl.com/69d5ogo

  25. cutchswife

    Telegraph’s “£500,000 teachers’ pension pot” claim is wrong – //tinyurl.com/69d5ogo

  26. Alex Higgins

    The Telegraph's false claims, bogus calculations about teachers' "500K pension pot" //t.co/sum4y2t #J30strike

  27. Andy Lewis

    The Telegraph's false claims, bogus calculations about teachers' "500K pension pot" //t.co/sum4y2t #J30strike

  28. Tim Saunders

    Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  29. DougRouxel

    RT @leftfootfwd: Telegraph lies about size of teachers' pension pot //t.co/ol4Vwgl #J30 #strike

  30. Brixtonite

    RT @leftfootfwd: Telegraph lies about size of teachers' pension pot //t.co/ol4Vwgl #J30 #strike

  31. taxpayer

    Some interesting maths you share. So as you say this is the State that funds this.

    The BEST rate that a private sector person could get to provide a pension is around 35:1.

    So you say that a teacher’s pension is more like £14,800 per annum, rather than that ridiculous £24,000 per annum. So someone in the private sector would need to save £14,800 x 35 = £518,000, plus the tax free lump sum, £44,400 = £562,400 to be able to replicate the pension from the Teachers’ Pension Scheme.

    OK, let’s strip out profit then. Let’s give the insurance company a margin of 15% to cover profit and expenses (huge, but let’s give you that).

    £14,800 x 30 = £444,000 plus your lump sum, £44,400 = £488,400, which is er, um, kinda, sorta very close to half a million pounds. What a disgrace for the Telegraph!

    I’ve actually ignored discounting on the lump sum, but the point is that you are cooking your maths too.

    I don’t begrudge teachers earning a decent wage and an adequate pension, but your skewed agenda doesn’t inform or help the debate. I have worked in this area my whole life and I believe that the country has a serious pensions problem.

    The government has unfortunately not put conveyed the case for change succinctly, but blinkers will not cover sup the facts unfortunately.

    Please – speak to your nearest pension actuary and get an independent view, and abandon defensive bunker-speak.

    What does “the Teachers’ Pensions Scheme contains long and short-lived people” mean? Its no different

  32. links for 2011-06-30 « The NRB

    […] Telegraph's "£500,000 teachers' pension pot" claim is wrong | Left Foot Forward […]

  33. Political Scrapbook

    If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr (from @shamikdas)

  34. Pam Smith

    If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr (from @shamikdas)

  35. .

    If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr (from @shamikdas)

  36. Jon

    If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr (from @shamikdas)

  37. Bern O'Donoghue

    If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr (from @shamikdas)

  38. Peter Savage

    Telegraph's claim of a £500,000 teachers' pension pot is wrong //t.co/xkuvLg6 #pensions #strike

  39. Rep in the Region

    If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr (from @shamikdas)

  40. David Whewell

    Telegraph's £500,000 teachers' pension pot claim is wrong //t.co/KMftymt

  41. Dave Roberts

    If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr (from @shamikdas)

  42. Lisa

    RT @leftfootfwd: Telegraph's "£500,000 teachers' pension pot" claim is wrong: //bit.ly/kjuJ7p reports @ShamikDas #J30 #J30strike

  43. Nemesis Republic

    RT @psbook: If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr

  44. Amangham

    @NemesisRepublic This: //t.co/mvTIaRV was something that WATB was lying about on #EDL yesterday.

  45. Anne Peat

    If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr (from @shamikdas)

  46. Jamie Brown

    “@psbook: The Telegraph's "£500,000 teacher pension pot" claim is wrong //t.co/paCGkKY (@shamikdas)” < nice disclaimer about pre 2006

  47. Len Arthur

    If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr (from @shamikdas)

  48. Neil Bradley

    If you didn't see it yesterday >> The Telegraph's "£500,000 teacher pension pot" claim is wrong //bit.ly/k4E7vr (from @shamikdas)

  49. Richard Blogger

    Can “taxpayer” explain to me why s/he has used the figure of 30 or 35years? Life expectancy for a woman is 85, so if she retires at 60 that is 25 years pension.

    Why are you assuming that everyone will live to 100?

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