§ Mr. Ashtonasked the Secretary of State for Education and Science (1) whether she will order an investigation into the financial arrangements of the Teachers' Superannuation Scheme; and whether she is prepared to consider funding the scheme;
(2) why there is to be an increase in superannuation contributions for teachers at a time when other public service contributors such as local government employees, doctors, and dentists are being offered the same benefits with no increase in contributions;
(3) whether she will increase the rate of 3½ per cent. interest at present paid out to contributors to the Teachers' Superannuation Scheme;
(4) whether she will list the percentage salary contribution paid by teachers to their pension scheme;
(5) why she proposes to increase the contribution of teachers to their pension scheme at a time when it has an annual surplus of £26 million;
(6) how much greater the total income has been over total expenditure in the teachers' superannuation scheme since 1925; and to what use this surplus has been put.
§ Mr. van StraubenzeeTeachers in England and Wales at present pay a contribution of 6 per cent. to the main superannuation scheme. Men members of the separate family benefits scheme pay a further 2 per cent., making 8 per cent. in all. Both contributions attract normal tax relief. It is proposed that these rates shall be replaced from 1st April, 1972, by a single contribution from all teachers to a new integrated scheme which will provide substantially improved benefits, including family benefits. This contribution, which is still under negotiation, will be 7 per cent. or a little less.
421WThis figure is just under half the actuarially determined cost of the new benefits for a new entrant. The balance of that cost, plus the substantial extra cost of providing the new benefits for teachers with service behind them on the present basis, will be borne by the employers. The new entrant contribution may vary between the schemes of different types of employee because of differences in career and salary structure, and in the balance of the sexes, as well as in benefits.
Between 1925 and 31st March, 1966, the teachers' scheme built up a balance of income over expenditure of £1,037 million. This is needed to enable the scheme to meet its future liabilities for the payment of pensions. The balance is paid into the Exchequer. In return, the Exchequer:—
pays 3½ per cent. interest on that part of the balance which accrued before 1st April, 1956; this rate is comparable with the average annual rate of interest for long-term Government securities between 1925 and 1956;
provided a special credit of £274 million in 1956 towards the actuarial deficit at the time;
credits the rest of the balance with the rate of interest appropriate to investments in long-term Government securities;
guarantees payment of the benefits;
bears the whole cost—equivalent to about 2 per cent. of salary—of pensions increase—that is, of increasing pensions in payment over time broadly in line with the rise in prices; and
would expect to bear the deficit if and when expenditure on pensions overtook contribution income.
A broadly representative working party under departmental chairmanship is at present engaged on a review of all aspects of the schemes for England and Wales, and for Scotland. I see no need for any further investigation. I have seen no evidence that a change to real funding, to which I see serious objections, would be in the interests of the teachers themselves.