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71% of teachers do not expect the teachers' pension scheme to provide enough income for them in retirement
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62% are saving to supplement their pension
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86% still believe the teachers' pension scheme is a key benefit of the job
With increasing concern from teachers over changes to their pensions, new research from Wesleyan for Teachers, the financial services specialist, has revealed that 71% of teachers do not expect the teachers' pension scheme to provide enough income for them to live on during retirement. However, almost nine out of ten (86%) teachers still believe it is a key benefit of the job and two thirds (66%) continue to regard teaching as a career they will stay in for their whole working life.
Simon Rake, National Sales Manager for Wesleyan for Teachers, said: "Clearly this is a period of uncertainty for many teachers who consider their pension scheme to be one of the most important benefits of their job. Proposed changes will mean they could face increased contributions, lower pensionable benefits and a later retirement age. This will have a severe impact on their finances whatever stage they are at in their career.
"Younger teachers could be discouraged from joining the teachers' pension scheme as retirement planning will already be low down on their priority list as other financial pressures take precedence. Teachers who are more advanced in their careers will have their existing pension benefits protected, but they could find themselves with a shortfall when they come to retire because of the proposed new arrangements. We'd recommend that teachers take financial advice from an adviser who understands their career path and pension scheme, to ensure they have the right plans in place to enjoy a comfortable retirement."
Wesleyan also found that over half of teachers (56%) plan to retire early and 62% are saving to supplement their pension. Half (50%) believe they will need an income of between £11,000 and £20,000 a year to retire on, while two fifths (41%) said they would require an annual income of between £21,000 and £30,000. According to the Hutton Report, the average teacher's pension in 2009-10 was £10,858*.
Simon Rake added: "When planning for retirement, teachers should think carefully about how much they will need to live comfortably. When you reach that stage in life, there may be a sense of greater financial freedom as children leave home and hopefully the mortgage is cleared. However, as people are living longer and are in better health later in life there will be other demands on cash such as travelling or supporting grandchildren. Teachers tend to leave retirement planning until later in life - 44% in our survey were over 35 before they took financial advice - which makes it harder to build up a good pension savings pot."
Wesleyan for Teachers is part of the mutual Wesleyan Assurance Society.
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