Melanie Moffatt says not all pensions are created equally, and members need to act while they are young to protect their retirement future.

Securing your future

We all know ageing is inevitable. From anti-ageing creams to the rise in popularity of Botox, society tries to hold back time. But, for all our efforts, the goal remains the same: to make it to retirement and enjoy it – perhaps sipping cocktails somewhere warm and sunny. 

Unfortunately, planning for that dream often falls low on our list of priorities, especially when we’re young. Given the choice, many younger employees will understandably favour a higher salary today over contributions to a future they can barely imagine. 

This isn’t a new trend. Before auto-enrolment was introduced in 2012, many younger workers chose not to opt in to their workplace pension schemes. They prioritised more money in their pockets over long-term security. 

Having worked in pensions for more than 20 years, I’ve spoken to hundreds of people approaching retirement with a sense of regret. Too many say the same thing: “I wish I’d done more, earlier.” And, by then, of course, the time to act has passed. 

Auto-enrolment was introduced, in part, to address exactly this issue – to nudge people towards saving for the future. And yet, despite the progress made, there’s still a vital conversation to be had, particularly when it comes to our public servants, including those in the teaching profession. 

Recently, there have been talks about offering alternative pension arrangements to teachers, often sweetened with promises of higher immediate pay. But it’s crucial to remember that not all pensions are created equal. And, in the long run, such alternatives may cost far more than they offer. 

The gold standard 

At the heart of this issue lies the Teachers’ Pension Scheme (TPS) – see www.teacherspensions.co.uk – a gold standard in pension provision. As a public sector defined benefit (DB) scheme, it provides guarantees that other pension types simply can’t match. 

In a DB scheme, the benefits you receive at retirement are defined and calculated using a set formula. This means your pension isn’t reliant on stock market performance and won’t suddenly lose value. These schemes are secure, inflation-proofed, and payable for life. 

On top of that, the TPS includes valuable additional protections, such as life cover and income support in the event of ill health. These aren’t just retirement benefits; they offer peace of mind throughout your career. The earlier you join, the more you benefit, thanks to compound growth and annual uplifts. 

In contrast, any proposed alternative would almost certainly be a defined contribution (DC) scheme. While these still provide a retirement pot, the final value is far less predictable. In a DC scheme, it’s the contribution that’s defined – not the outcome. 

Contributions are invested, meaning your pension can grow, but it can also shrink. The responsibility – and the risk – falls on you. Planning becomes harder when you don’t know what income you’ll have. 

Some argue that DC pensions offer more flexibility at retirement. That may be true – but flexibility often comes with trade-offs. Many DC pensions aren’t inflation-linked, and some don’t provide a guaranteed income for life. These features can significantly impact your standard of living in retirement. 

Social contract 

We must also remember that a teacher’s pension is a key part of their total remuneration. It exists not just as a financial incentive, but as a recognition of the vital role teachers play in shaping society. 

There’s a reason teaching comes with a strong pension – it’s part of the social contract we uphold for those dedicating their careers to public service. 

At ASCL, we believe no teacher should have to choose between decent pay today and a secure retirement tomorrow. 

As the profession faces decisions about future pension arrangements, it’s imperative we safeguard what’s already in place. The next generation of teachers deserves the same financial security in retirement as those currently approaching it. 

We all have a responsibility to make sure that happens, by informing younger members, encouraging early participation, and protecting schemes like the TPS that offer genuine long-term value. 

Because when it comes to pensions, the fine print matters – and not all schemes are created equal. 

FURTHER INFORMATION

For more information and guidance on pensions, please see the ASCL website: www.ascl.org.uk/pensions

Melanie Moffatt
ASCL Conditions of Employment Specialist: Pensions

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