The Teachers (Superannuation) Act, 1956

Transcription

1 The Vocational Aspect of Education ISSN: (Print) (Online) Journal homepage: The Teachers (Superannuation) Act, 1956 J.L. Gayler To cite this article: J.L. Gayler (1957) The Teachers (Superannuation) Act, 1956, The Vocational Aspect of Education, 9:19, 73-87, DOI: / To link to this article: Published online: 30 Jul Submit your article to this journal Article views: 32 View related articles Full Terms & Conditions of access and use can be found at Download by: [ ] Date: 13 January 2017, At: 03:42

2 THE TEACHERS (SUPERANNUATION) ACT, 1956 By J. L. GAYLER Principal, Municipal College of Commerce, Newcastle upon Tyne (.4 paper presented to the Annual General Meeting of the Association of Principals of Technical Institutes on 21 st February 1957.) THE TEACHERS (SUPERANNUATION) ACT, 1956, has not radically changed the basic structure of teachers' pensions established by the Teachers (Superannuation) Act, The Act of 1956 has, however, made important modifications all of which will affect existing teachers and new entrants to the service. Some of these modifications are now part of our law, whilst others will only be implemented upon the making of Rules by the Minister. This memorandum will deal first with the principal modifications which are now in force, and secondly with those modifications which have yet to be implemented. Only those changes affecting England and Wales have been considered. MODIFICATIONS WHICH ARE NOW IN FORCE I. Calculations of pensions, allowances, gratuities The Act of 1956 had made numerous changes to the method of calculating pensions, etc., payable after 30th September The present position may be summarised: (a) Annual allowance This is now calculated on the whole period of pensionable service multiptied by ~ of the average salary for the last three years of service. Not more than 40 years before the age of 60 can count as pensionable service and the maximum number of pensionable years of service is 45. (b) Additional allowance (lump sum) This is calculated by multiplying ~- of the average salary for the last three years of pensionable service by the whole period of pensionable service; but for service after 30th September 1956, the fraction of ~: is increased to g~. The maximum number of years of pensionable service that may count towards the additional allowance is 45, and the lump sum for service up to the age of 60 is limited to a sum equal to one and half times the average salary. (c) lnfirmity pension The pension granted on the ground of infirmity is calculated in the same way as for a normal retirement pension. Where less than 20 years' pensionable service has been done the pension will be normally calculated on 20 years of

3 74 The Teachers (Superannuation) Act, 1956 service, provided that 20 years of service could, but for the infirmity, have been completed before the age of 65. The service qualification for an infirmity pension is 10 years of pensionable service. (d) Short service gratuity In cases where the teacher's pensionable service is less than 10 years a gratuity (single payment) may be made. The gratuity is an amount calculated by reference to the whole period of his service at the rate of ~- of his average salary for the last three years of pensionable service. In calculating the pensions, etc., outlined (a)-(d) the total service of the teacher need no longer be expressed in completed years of service. (e) Death gratuity On the death of a teacher in pensionable service and where not less than 5 years' pensionable service has been done, a death gratuity is payable to the personal representative of the deceased teacher. The death gratuity is the greater of (i) the average salary for the last 3 years of pensionable service, or (ii) the lump sum that would have been payable if at the date of the teacher's death he had become permanently incapable through infirmity of serving efficiently as a teacher in pensionable service. If the teacher's balance of contributions exceeds the amount that could be paid as a death gratuity, the former is paid in lieu of the death gratuity. (f) Supplementary death gratuity Where a teacher who has been granted a pension dies, and the total of the sums paid to him and to his personal representative by way of pension and lump sum is less than the average salary on which his pension was calculated, the difference is paid as a supplementary death gratuity. Before the 1st October 1956 the general rule was that a teacher neither contributed in respect of, nor was pensioned on, any amount by which his salary exceeded 3,000. There is now no limitation on the amount of salary upon which a teacher makes contributions or is pensioned upon. The Act makes no change to the various minimum periods of service necessary to qualify for a pension, e.g. a teacher may still qualify for a pension by doing pensionable service amounting to two-thirds of the period between the date of entry into pensionable service and his sixty-fifth birthday, subject to a minimum of 10 years. 2. Contributory service Although a teacher could, before 1st October 1956, be employed after the age of 65, his service could not be treated as contributory service. Under the Act of 1956, it is now possible for a teacher to be employed in contributory service up to the age of 70 years. The Act, however, does not confer on teachers any right to continue in service beyond 65, or indeed to any age.

4 J. L. GAYLER Contributions From 1st October 1956 contributions are payable by teachers of 6 per cent of their salary. Contributions cease to be payable as soon as the teacher completes 45 years of service which count in the calculation of his annual allowance. As no more than 40 years of service before the age of 60 can count for this purpose no teacher under 65 can be excused contributions. 4. Reduction of salary The Act of 1956 makes provision for older teachers who may be willing to continue in service after, say the age of 65 years, in a less responsible post at a lower salary. A teacher who suffers a reduction in his salary after 30th September 1956 while continuing to be employed or upon being re-employed in contributory service may, with the approval of the Minister, elect to take the benefit of Section 7 (3) of the Act. If this election is made, superannuation contributions, both teacher's and employer's, and any benefits are thereafter calculated by reference to the original salary until either the teacher withdraws his election or his original salary is exceeded by his current salary. The election operates from the date of reduction of salary or from the date of re-employment as the case may be, and the Minister will not agree to the election unless application is made within a reasonable time after the reduction in salary. 5. Intervals of payments of annuities and allowances Before the passing of the Act of 1956 the Minister had no option but to pay pensions and annuities quarterly. The Minister may now make arrangements for the payment of annuities and allowances at such times as the Treasury may determine, e.g. monthly. 6. Increased annual allowance in exchange for surrender of additional allowance (lump sum) Under the Act of 1956 a teacher may, upon making his application for a superannuation allowance, elect to surrender part of his additional allowance (lump sum) in exchange for an increase in the amount of his annual allowance. The Government Actuary has prepared tables showing, according to the age and sex of the teacher, the annual sum equivalent to a lump sum of 100 paid at date of retirement. Examples are: Age last birthday at retirement Annual sum payable for life, equal in value to a lump sum of 100 paid at date of retirement Female Male 6 8s. 2d. I 7 5s. 5d. 7 4s. l ld. 8 8s. ld. 8 9s. 6d. [ 9 19s. 0d.

5 76 The Teachers (Superannuation) Act, 1956 The following points must be noted in connection with this right: (i) Any increase in the amount of the annual allowance secured by surrendering part of the lump sum is taxable as earned income. (ii) It will be seen below (para. 7) that there is a limitation on the right of a teacher to allocate part of his annual superannuation allowance to a dependant, e.g. he cannot surrender more than one-third of his annual superannuation allowance. In considering this limitation any additional annual allowance procured by surrendering part of a lump sum must be ignored. (iii) Upon implementation of the Scheme a teacher may, by surrendering part of his lump sum, provide a pension for his widow or other dependants (see below). Before deciding to increase his annual allowance by surrendering part of his lump sum a teacher must, of course, bear in mind that after providing for a possible widow's pension he may have very little of his lump sum remaining to convert into an additional allowance. 7. Allocation of teachers' annual superannuation allowance to his (her) wife (husband) or to a dependant The Teachers (Superannuation) Act, 1937, provided that a teacher might surrender on retirement part of his annual superannuation allowance in return for the grant of certain benefits to his (her) wife (husband) or to a dependant of the teacher. The Act of 1937 gave this right of allocation only to a retiring teacher, i.e. a teacher to whom an annual superannuation allowance had been granted. The Act of 1956 has extended this right of allocation to a continuing teacher, that is, a teacher who would have become entitled to an annual superannuation allowance if he had chosen to retire, i.e. a teacher of 60 or over who has completed the qualifying period of age allowances under the Teachers Superannuation Acts. The following points must be noted in connection with this right: (i) A teacher can make allocation in favour of one person only. That person must be either the wife (husband) or a dependant of the teacher. The dependant need not be a relative of the teacher, but must be someone who is wholly or partially dependant upon the teacher for support. (ii) A teacher who has been granted an annual superannuation allowance by reason of infirmity of mind or body cannot make an allocation. (iii) An allocation may be made under one of two Options--A and B: (a) Option A. The benefit is a pension payable to the wife (husband) or a dependant of the teacher after the death of the teacher. Under this option if the beneficiary (allocatee) dies before the teacher then the teacher's pension is payable at the amount to which it has been reduced by the amount surrendered.

6 J. L. GAYLER 77 (b) Option B. Here the beneficiary may only be the wife or husband of the teacher. The benefit consists of: 1. An annuity payable to the teacher from the date of commencement of his annual superannuation allowance during the joint lives of the teacher and his (her) wife (husband), and 2. A pension of double the amount of this annuity to the widow or widower upon the decease of the teacher. Under Option B the annuity received by the teacher in exchange for part of the superannuation allowance ceases if the spouse dies before the teacher. The teacher then receives his full pension less the amount surrendered. If the teacher dies first the widow or widower receives a pension of double the amount of the annuity. (iv) The teacher must submit to a medical examination before making an allocation, and an allocation can only be made if the teacher is of good health having regard to his age. After making an allocation the health of a continuing teacher may deteriorate. This will not affect the allocation made. The Ministry does not require the beneficiary (allocatee) to undergo a medical examination, but the relation of the portion of annual allowance surrendered to the benefit secured by the beneficiary is calculated by the Government Actuary on the assumption that the beneficiary is of good health. If the teacher suspects that the beneficiary is not of good health it would probably be wise for him to ask the beneficiary to undergo a medical examination before deciding to allocate a portion of his or her pension. (v) There are certain limitations on the amount of the annual superannuation allowance that a teacher may allocate. The main limitations are a teacher may not allocate (a) more than one-third of his or her annual superannuation allowance; (b) so much of his allowance as would make the amount of the allowance (as reduced by the amount surrendered) payable to him less than the amount of pension payable to the beneficiary after the teacher's death; or (c) a smaller amount of the allowance than would secure for the beneficiary after the death of the teacher a pension equal to one-fourth of the amount of the allowance (as reduced by the amount surrendered) payable to the teacher. (vi) Provided that he does not contravene rule (v) a continuing teacher may make more than one allocation as long as the allocation is in favour of the same beneficiary and in accordance with the same option. (vii) Once an allocation has been made no alteration in circumstances, e.g. divorce, separation, death, cessation of a dependant to be dependant on the teacher, can regain for the teacher the amount of the annual superannuation allowance that he has surrendered. (viii) The Ministry has prepared twelve option tables, 1 for various combinations of pensioner and beneficiary, e.g. male retiring teacher and female beneficiary choosing Option A, female continuing teacher and husband

7 78 The Teachers (Superannuation) Act, 1956 beneficiary choosing Option B, etc., showing for various ages the benefit secured for each 1 of the teacher's annual superannuation allowance surrendered. The following illustrations show the various choices before a teacher: (a) Assume a male teacher, age 60, who could retire on an annual pension of 300. Assume that the teacher has a wife, aged 55, and that the teacher wishes to allocate 50 of this 300 to his wife. As a retiring teacher choosing Option A The option tables show that for each 1 of his annual superannuation allowance surrendered by the teacher his wife would receive 2 4s. 9d. a year from the date of the death of her husband. Therefore the teacher's pension would be 250 and the widow's pension s. 6d. As a retiring teacher choosing Option B The option tables show that for each 1 surrendered an annuity of 1 ls. 4d. would be payable to the teacher during the joint lives of himself and wife. The pension of the teacher would therefore be 250, the annuity payable to her during joint lives will be 28 6s. 8d. and the pension payable to the widow (should she survive the teacher) would be 56 13s. 4d. (This infringes Rule v (c) above and the amount of allocation would have to be increased.) As a continuing teacher choosing Option A The option tables show that for each 1 of the annual superannuation allowance surrendered the widow would be entitled to I 18s. 5d. a year for life. The widow's pension would therefore be 96 0s. 10d. (b) Assume a woman continuing teacher, aged 62, with an estimated pension of 244 wishes to allocate 40 for the benefit of her husband, aged 62. An allocation of 1 under Option A would purchase 6 4s. 4d. for the widower. An allocation of 40 would purchase s. 4d. The teacher's pension reduced ( 244, less 40) would be less than the beneficiary's pension and Rule v (b) above would be infringed. The allocation would have to be reduced. Although in the case of the continuing teacher the allocation is referable to the amount of pension the teacher would receive if he had chosen to retire at (approximately) the date upon which he makes application for an allocation, the gross pension he will ultimately receive will normally be higher because it will be calculated on the number of years' service he has doge at the date of his actual retirement. The net pension he will receive, however, will be his gross pension upon retirement less the allocation that he has made.

8 J. L. GAYLER 79 (ix) What is the position of a continuing teacher who makes an allocation and then dies in contributory service? The Act provides that in these circumstances the teacher's allowance must be treated as if the allowance had commenced immediately before the teacher died. The effect of this provision is that for the purpose of the allocation rules the continuing teacher is deemed to have died after he had retired. 8. Previous employment which provides experience of value to the teacher Prior to the Act of 1956 it was not possible for a teacher to count his years of employment prior to entry into teaching service towards a pension payable under the Teachers Superannuation Acts. It is now possible for a teacher to count this service by the payment of an appropriate sum. Rules have now been published under the Act which lay down the terms under which a teacher may, by payment of additional contributions, count as pensionable service for the purpose of calculating superannuation allowances a period of employment before entry into teaching service which, in the opinion of the Minister, provided experience of value to him as a teacher. A teacher may, at the Minister's discretion and subject to certain conditions, pay additional contributions in respect of a period of previous employment which provides experience of value to him as a teacher. The primary object of these new rules is of course to assist in the recruitment of persons with specialist qualifications or experience in industry or commerce to posts in technical institutions and to certain posts in secondary schools. The new rules, however, although primarily designed to assist recruitment, are also applicable to teachers already in contributory service. It has not been possible to define the types of 'experience of value' that would be acceptable but the Minister has stated that the rules only apply to a person whose experience is of direct value to him in the teaching post to which he is recruited, and not where the experience could be regarded as of value in a very general sense. 2 The chief conditions that a teacher wishing to take advantage of these new provisions must bear in mind are as follows: (i) The provisions only apply to persons who begin teaching between the ages of 25 and 50. (ii) A teacher must apply to the Minister for a direction authorising the payment by the teacher of additional contributions in respect of employment prior to entry into teaching. This application must be made in the case of a teacher already employed in contributory service at the date of the coming into operation of the rules (lst August 1957) within six months of that date. If the teacher is not employed in contributory service at that date he must apply within six months of the date when he does enter contributory service. The Minister may, however, extend the time limit in any particular case if he considers that there are reasonable grounds for so doing.

9 80 The Teachers (Superannuation) Act, 1956 (iii) If the Minister gives a direction that the teacher may pay additional contributions in respect of employment prior to entry into contributory service, then these additional contributions may be paid either as periodical payments (Method I) or in a lump sum (Method II). The amounts to be paid are determined by reference to the table prepared by the Government Actuary. 3 Under Method I the additional contributions are payable, from the first day of the month in which the Minister's directions are given, in respect of all periods of contributory service up to the teacher's sixtieth birthday, earlier breakdown, or death. Normally, the additional contributions will be deducted from salary. The periodical payments under Method I are limited to an amount which, together with the basic contribution of 6 per cent, does not exceed 15 per cent of salary. The capital value of any excess will be paid by lump sum or instalments of a lump sum. Tax relief will be given for the periodical payments but not for the lump sum or instalments of lump sum payable in respect of the amount of contributions exceeding 15 per cent of salary. Under Method II the lump sum will be paid direct to the Minister. No tax relief is given in respect of this sum. The following table gives examples of the cost of 'buying in' previous service: Annual Contribution Lump Sum Payment Age Percentage of remuneration payable by the teacher in respect of each year added Reduction in annual contribution in respect of each 1 of reduction in the annual superannuation allowance on account of national insurance modification provisions Percentage of remuneration payable by the teacher as a lump sum in respect of each year added Reduction in lump sum payment in respect of each 1 of reduction in the annual superannuation al~owanc~ on account Of national insurance modification provisions 25 and under and under and under 46 Men and Women 0"31 0"47 0"91 Men s. d Women - - i ; 16 Men and Women 8"63 9"01 10"70 Men Women s.d. s.d (iv) (v) A teacher cannot ' buy in' more than 5 years of employment prior to entry into contributory service. If the Minister gives the necessary direction, following the application of the teacher, the period will be reckoned as contributory service in calculating the amount of any benefits payable under the Teachers (Superannuation) Acts. The period of employment prior to teaching service does not, however, count towards the period necessary to qualify for benefits; that is, the teacher must in general complete 10 years of pensionable service before he can qualify for a pension.

10 J. L. GAYLER 81 MODIFICATIONS WHICH WILL NOT BE IN FORCE UNTIL RULES HAVE BEEN MADE Widows', children's and dependants' pensions It has been possible since 1937 for a teacher to provide for his widow or other dependant by allocating part of his annual superannuation allowance (see above). There are three weaknesses in this method: first, it is only possible to make provision for one dependant, whether that dependant be a wife, child or other person; secondly, a teacher must pass a medical examination before making the allocation; thirdly, a teacher cannot make provision for his wife or other dependant until he himself is in a position to retire. The new Act of 1956 may at some future date enable a teacher to make much more elaborate provision for his wife, children and other dependants. The Act of 1956 authorises the Ministry, after consultation with representatives of local education authorities and of teachers affected, to make rules for the payment of pensions to widows, widowers, children and other dependants of teachers who die, after such date as may be specified in the rules. The Ministry has issued an 'Outline of Suggested Widows, etc., Scheme' to provide a basis for discussion. The Outline (except in the matter of financing the Scheme) broadly follows the existing Civil Service Scheme. The Act itself, however, specifically provides for three matters, and these three matters cannot be varied or rescinded by the rules: (1) The class of teacher to whom the new scheme will apply The Scheme will apply to teachers who die after a date specified in the Rules, being teachers who: (a) have become eligible for the grant of an annual superannuation allowance; or (b) die while employed in contributory service in circumstances in which they would have been eligible for a grant of an infirmity allowance; or (c) having been employed for not less than ten years in recognised or contributory service, die within a period to be prescribed by the rules, after ceasing to be so employed. (2) Election to join the scheme A teacher who is in service at a date specified in the rules cannot be compelled to join the Scheme, but is given a right of election to do so. A person who joins the teaching service after the date specified may be compelled to join the scheme in so far as it provides for pensions for widows and children but not in so far as it provides for pensions for other dependants. (3) Contributions for the scheme The contributions to support the benefits payable are not to be payable directly by or in respect of teachers. The contributions are to be satisfied as the case may be:

11 82 The Teachers (Superannuation) Act, 1956 (a) by means of the reduction of any additional allowance (lump sum); (b) by means of the reduction of any sum payable by way of death gratuities or return of contributions. THE MINISTRY OF EDUCATION'S OUTLINE SCHEME It is now proposed to explain the Ministry's Outline Scheme. It is well known that discussions between the Ministry and the teachers' associations have broken down. The Minister certainly now has the authority to promulgate rules for widows' and dependants' pensions, but he is unlikely to do so without the approval of the local authorities and teachers' associations. Whether further discussions will take place in the near future is difficult to say. The Outline Scheme in fact provides for two wholly distinct schemes (a) the widows' and children's pension scheme and (b) the dependants' pension scheme. A. The Scheme as it Affects Entrants to Teaching Service after the Date to be Specified in the Rules--(New Teachers) 1. Widows' and children's pension scheme All men teachers are to be subject to the scheme. A woman teacher whose husband is wholly or mainly dependant on her may elect to enter the scheme at any time. In what follows the position of a male teacher is considered; identical conditions would apply to a woman teacher with a dependant husband. (a) Widow's pension (i) On the death of a teacher, in service, after at least 10 years' contributory service, his widow would receive a pension of one-third of the pension he would have been entitled to had he retired on an infirmity pension because of ill-health on the day he died. (ii) On the death of a teacher, after retirement, after at least 10 years' contributory service, his widow would receive a pension of one-third of the pension that had been payable to the teacher. The minimum pension payable to a widow would be 52 a year. (b) Cessation of widow's pension The pension would cease upon re-marriage, but the Minister may restore the pension: (i) if there are compassionate reasons for so doing; or (ii) if the woman again becomes a widow. (c) Children's pension (for the benefit of the whole family of children) Children would be eligible for benefit provided they are under 16 years of age, or receiving full-time education or undergoing whole-time training of at least two years' duration for any trade or profession, for which training and pay received does not exceed 52 a year. The pension is for the benefit of the whole family of children. The amount payable would vary according to the number of children who are eligible at any particular time and whether a widow's pension is being paid:

12 (0 (ii) J. L. GAYLER 83 Where a widow's pension is being paid the total amount of the children's pension would be: Pension Four or more 65 a year, or an amount equal to the widow's children pension, whichever is the greater. Three children 52 a year, or an amount equal to three-quarters of the widow's pension, whichever is the greater. Two children 37 a year, or an amount equal to one-half of the widow's pension, whichever is the greater. One child 26 a year, or an amount equal to one-quarter of the widow's pension, whichever is the greater. Where no widow's pension is beingpaid, the total amount of the children's pension would be: Three or more children Two children One child 65 a year, or an amount equal to what would have been the widow's pension, whichever is the greater. 52 a year, or an amount equal to three-quarters of what would have been the widow's pension, whichever is the greater. 39 a year, or an amount equal to one-half of what would have been the widow's pension, whichever is the greater. (d) Cessation of children's pension Normally these pensions would cease upon remarriage of the widow, but exceptionally at the Minister's discretion they may be continued. Payment may be resumed on the widow's death, if the children are still under 16 or in receipt of full-time education or training. (e) Amount of contributions The amount of the contribution would be equal to ~ of the average salary of the teacher during the last three years of service for each year of contributory service. Should the wife of the teacher die during the teacher's service no reduction would be made to the additional allowance (lump sum) in respect of the period after the death of his wife, unless he remarries before retirement, (f) Retrospection The widow's and children's pension scheme may apply to a teacher, at his option, who had retired on pension before the operative date of the rule provided that he was (i) in contributory service on or at some time after 1st October 1956, the date the Act came into operation, (ii) married when he ceased to serve in contributory service, and (iii) had not remarried before the operative date of the rules. (g) Entitlement to widow's pension where the teacher dies after the operative date of the rules while out of contributory service The widow of a teacher who had sufficient service to qualify for pension benefits at the age of 60, but had left teaching before that age, and died while out of contributory service would be eligible for a pension.

13 84 The Teachers (Superannuation) Act, Dependant's pension scheme (a) Nominating teachers The following classes of teacher may nominate a dependant to be a beneficiary under the scheme: An unmarried man. A woman who has not elected to enter the widows' and children's scheme, i.e. one who has not got a husband wholly or mainly dependant upon her. Exceptionally a married man or a woman in the widows' and children's scheme who had an incapacitated child (a child who because of some bodily or mental infirmity is unlikely to be capable of earning his own living) may nominate the child for a life pension under the dependants" scheme. (b) Nominee dependants A teacher may nominate any person, whether a relative or not, to be a beneficiary under the scheme, provided that the nominee is wholly or mainly dependant upon the nominating teacher. The dependant, however, must be wholly or mainly dependant on the teacher when nominated and continue to be so dependant until the teacher retires, and must not, except in the case of an incapacitated child, be eligible for a pension under the widows' and children's pension scheme. A teacher can nominate one adult, or up to three children. (c) Marriage of female dependant The nomination becomes void if marriage takes place whilst the teacher is in service. If the dependant marries whilst drawing a pension, the pension will cease. The Minister has power to renew the pension if there are compassionate reasons for so doing, or if she (the female dependant) is widowed. (d) The rate of contribution This is expressed at so many pounds, shillings or pence per 100 of average salary for the last three years of service. The rate will vary according to (i) the sex of the nominating teacher; (ii) the sex of the nominated dependant; (iii) whether the dependant is adult or child; (iv) the relative ages of teacher and dependant. When expressed as a percentage of average salary the rate is known as the prescribed percentage. (e) The amount of contribution The actual amount of contribution is to be deducted from the additional allowance (lump sum), death gratuity or return of contributions as the case may be. ILLUSTRATION 1 Assume a woman teacher at the age of 50 wishing to provide for a dependant sister, aged 55, nominates her as a beneficiary under the scheme. Assume the teacher eventually retires at 50, after 40 years' service, and that the average salary for her last 3 years of service is 800.

14 s. L. OAYLER 85 According to the actuarial tables the rate of contribution in this case is 18s. 0d. per 100 of average salary. The amount that will be deducted from the lump sum may be calculated: (a) 18s. 0d. x 8 x or (b) 18s. 0d s. I,200 = 288 (The ~ rate provides a lump sum of 3 15s. per 100 of average salary; the lump sum on the average salary of 800 for 40 years' service is 1,200.) ILLUSTRATION 2 Assume the same facts as in Illustration 1 except that the dependant is a child, aged 10, who starts work at 16. The rate of contribution in this case according to the tables is 4d. per 100. The deduction from the lump sum would be 36 8 x 4d. = 4 16s. 0d. N.B.--The pension payable to the child dependant would be of limited duration: the dependant must be wholly or mainly dependant when nomination is made and must continue to be so dependant until the teacher retires. The pension would therefore last until the child is 16 or until the termination of his full-time education or training. (f) Limitation on the amount of total benefit payable to dependants There would be limitations on the total benefit payable to dependants: (i) The total benefit payable to dependants would not exceed one-third of the pension of the nominator, that is an adult dependant would receive at a maximum one-third of the teacher's pension. (ii) The Ministry in its Outline has suggested that the amount of the lump sum available as a contribution might be limited: (a) In view of the possible commitments under the widows' and children's scheme, e.g. a bachelor marrying, the prescribed percentage under the dependants' scheme should be limited in the case of men to A prescribed percentage of 1.25 to provide a pension of unlimited duration for a dependant would mean a deduction of one-third from the lump sum of the teacher. (Assume 40 years' service and an average salary of 800 for the last 3 years of service: 1.25 x8 x40 = 400, which is one-third of the lump sum of I,200.) (b) A woman might not be allowed to surrender more than two-thirds of the lump sum. If the percentage of 1.25 or the fraction of two-thirds are exceeded the pension of the dependant would have to be scaled down from the one-third of the nominator's pension.

15 86 The Teachers (Superannuation) Act, 1956 ILLUSTRATION A male teacher, aged 50, wishes to provide for his dependant brother, aged 46. The contribution rate is 1 17s. 0d. per 100 (prescribed percentage is 1.85). The contribution rate would have to be limited to 1 5s. 0d. (1.25) and a scaled down benefit payable to the dependant. (iii) There would have to be some limitation on the amount paid to child dependants, e.g. One child: half the adult rate; Two children: in total, three-quarters of the adult rat~ Three children: in total, the adult rate. B. Application of Scheme to Teachers in Service at the Date to be Specified in the Rules 1. Widows' and children's scheme The scheme outlined above would be applied to existing teachers but with certain modifications. The Ministry states that if the full scheme of benefits is to be made available to existing teachers it would be necessary to meet the cost in respect of back service. If this were done on the same basis as that for post 1st October 1956 service the married teacher would have to bear the following deductions from his additional allowance (lump sum): (a) A deduction of ~ multiplied by years of service made out of the lump sum for post 1956 service and (b) A deduction of ~ multiplied by years of service for pre-1956 service. But allowance must be made for the fact that existing teachers have had no cover in respect of widows' and children's pension in respect of pre-1956 service. It has been suggested that the following deductions should be made from the additional allowance (death gratuity or return of contributions as the case may be), (a) ~ of average salary multiplied by years of service in respect of each year of pre-1956 service; (b) ~ of average salary multiplied by years of service in respect of each year of post-1956 service. The married man would be given six months to decide whether he wished the widows' and children's scheme to apply to him. A bachelor would be given a similar period to exercise an option should he subsequently marry. A married woman with a husband wholly or mainly dependant on her could elect to enter the scheme at any time during service. 2. Dependants" scheme A teacher who is not eligible to enter the widows' and children's scheme will be eligible to enter the dependants' pension scheme.

16 J. L. GAYLER 87 The deduction from the additional allowance (death gratuity or return of contributions as the case may be) would be calculated upon nomination in the same way as for new entrants to the teaching service. REFERENCES 1. Full particulars of the allocation of pensions are to be found in : "Allocation of Pensions-- Explanatory Memorandum', Form 207 Pen. H.M.S.O. (ls, 6d. net). 2. Hansard, 22nd Sept Second Schedule of The Teachers Superannuation (Previous Employment) Rules, S.I. 1957, No H.M.S.O.