Teachers prioritise immediate salary increases over retirement benefits, with some willing to miss out on as much as 20 per cent of their retirement income in favour of a 10 per cent salary boost, research from the Education Policy Institute (EPI) has found.

The survey found that teachers value a 10 per cent increase in their retirement income only as much as a 6.3 per cent increase in their current salary, meaning that salary increases are 1.6 times as valuable as pension increases

In addition to this, a "sizeable" proportion of teachers would prefer more flexibility in their pension plans, with 15 per cent of teachers willing to trade 20 per cent of their pension income for a 10 per cent salary increase.

Younger teachers, particularly those in their twenties, were two-thirds more likely to trade pension for salary than teachers in their fifties, as almost 1 in 5 (19 per cent) teachers in their twenties would prefer a compensation package with a 10 per cent salary increase, even if it meant switching to a DC pension and losing 20 per cent of their retirement income, compared to 11 per cent of teachers in their fifties.

In addition to this, teachers who are financially struggling are a quarter more likely to want to trade pension entitlement for salary than teachers who are financially comfortably.

Despite this, the research found that teachers strongly prefer a guaranteed retirement income, such as the one provided by the Teachers' Pension Scheme (TPS), over income dependent on stock market performance, revealing that 22 per cent are less likely to choose a pay package tied to stock market performance over one that guarantees their retirement income.

In fact, the survey found that teachers are willing to give up 10 per cent of their salary to keep that retirement security.

Given these findings, the report urged the government to allow schools to offer broader pension options, noting that while currently, all teachers in state-funded schools are automatically enrolled in the TPS, a "substantial minority" of teachers prefer to trade some retirement income for current salary.

It also urged the government to investigate the possibility of providing flexibility within TPS, suggesting that the government should review the TPS with recruitment and retention in mind.

"It may be that, as with schemes such as the civil service pension scheme, there is room to offer more flexibility within the TPS and make teaching a more attractive profession to more people," the EPI stated.

In addition to this, the EPI encouraged the government to conduct research into the likely impact and consequences of various policy options, with the goal of offering a set of schemes that promote recruitment and retention, while still ensuring retirement security for teachers.

However, Barnett Waddingham partner, Martin Willis, argued that while evolution is required, "it needn’t be revolution and there are many needs and views that need to be considered".

“It’s clear and unsurprising that TPS is incredibly valued by the majority – not just the quality of pension provision but the guarantees provided," he continued.

He also warned that while greater choice could bring benefits in terms of flexibility, it does also come with complications.

"There are legal and funding complexities to consider carefully, and if such a choice is offered, appropriately education around it is key," he continued.

"Anyone opting for the alternative needs to understand what they are giving up, both in terms of the guarantees of DB and the lower contributions being paid – all things being equal, saving less money in the present will result in a lower income in retirement.”

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