They holiday all year round, have yachts moored in marinas and belong to the most exclusive golf clubs. And they do it all at taxpayers’ expense.

That is the image of retired teachers put about by sections of the media as ministers push through plans to make teachers pay more towards their pensions and receive less on retirement.

According to The Daily Telegraph’s political editor, a teacher on pound;32,000 a year “can retire with a pension equivalent to having built up a private sector pension pot of pound;500,000 - 20 times higher than the average”. Every British family faces a total bill of pound;13,500 to pay pensions for teachers, he claimed in June.

Guest columnist Neil O’Brien, director of think-tank Policy Exchange, went on to inform the paper’s readers that teachers retire on annual pensions of pound;24,000 plus a lump sum of pound;70,000, and headteachers get pound;42,000 a year.

“These payouts don’t come from some great bank vault full of cash that teachers have contributed over the past. The teachers’ pension scheme is `unfunded’. That means the cash comes from current government expenditure. More plainly, it comes from tax being paid by you or I right now,” he thundered.

It sounds too good to be true, and it is. Retired teachers contacted by The TES are not on the breadline, but they are not living in luxury, either. Many have taken up other jobs or part-time supply teaching in the early years of their retirement.

The Government is attempting to convince the electorate that public sector pensions are gold-plated and unaffordable, says Mary Bousted, general secretary of teaching union the ATL. “Their willing helpers in the media sow division and discontent through their accusations that private sector workers are subsidising inflated pensions for public sector workers. Nothing could be further from the truth. Consider one fact from the Hutton inquiry: the average pension paid to a teacher or headteacher is pound;10,858 a year. It’s hardly the stuff of which luxury retirements are made,” she says.

The Government claims the reforms are needed because people are living longer. It plans to raise the contribution made by teachers from the present 6.4 per cent of gross salary to between 6.4 per cent and 8.8 per cent, the proportion paid rising with earnings. Teaching unions fear the next step will be a reduction in the 14.1 per cent employers’ contribution.

Teachers point out that they have already agreed, back in 2007, to higher contributions and a reduction in benefits to keep the scheme financially viable in terms of the money coming in from working teachers and going out to retired members. The changes included a rise in the pension age to 65 for new members, restrictions on lump sum payments and a cap on the amount of public funds going into the scheme.

Existing members may be better off than those who will come after them, but the teachers retiring now were the ones who suffered from the very low levels of pay in the 1970s and 1980s. In 1975, the average teacher salary in the better-paid secondary sector - including headteachers - was pound;3,702 for men, compared with a national average men’s full-time salary of pound;2,907.

In 1985, the secondary teacher average was pound;10,946 for men and pound;9,287 for women, against average earnings of pound;7,930. Teachers were earning just a fifth more than the average wage in the 70s and 80s. By 2010, it had risen to a third more.

Things were so tight at that time (the 70s) that people had to come out of the pension scheme for a while to be able to buy necessities, such as a pram for their babies, says Lesley Ward, a retired primary teacher. “A safe and predictable pension is probably the only perk of the job besides chalk and nits,” she says.

Mrs Ward did not take time off to look after children, as many women do, and managed to accrue 36 years. Luckily, she held management posts in three of her past 10 years at Intake Primary in Doncaster and that increased her earnings and pension entitlement. “I have just retired at the age of 57 and will get a pension of pound;15,000. If I hadn’t had those management posts, I would be getting pound;12,000 after 36 years, which is hardly like the huge sums and luxury lifestyle being talked about in the media,” she says.

As for Neil O’Brien‘s claim that taxpayers fund the pensions: “A teacher would just need to wave a payslip under O’Brien‘s nose to put paid to that kind of cobblers,” she says. “Teachers and employers are paying more than a fifth of gross salaries into the scheme and that funds the pensions of retired members.”

For teachers such as Liz Williams, 61, who retired at the age of 58 after 36 years in the job, pension is deferred salary, a reward for struggling to meet the payments into the scheme in their early careers. “My pension is not great. It’s just over pound;1,000 a month,” says Mrs Williams, a primary teacher from Hazel Slade, Cannock in Staffordshire. The big perk of retirement is being able to take cheaper holidays out of season, she says. “So far we have only made it up to Scotland, but we got more tranquillity and better prices.”

Philip Smith, 61, also retired at 58, seizing the opportunity of voluntary redundancy just months before a rule change that would have significantly reduced his lump sum redundancy payment. He was in the senior management team of the Ridgeway School in Plympton, Devon, earning pound;54,000 a year. “For years I had been doing very long hours and taking my laptop on holiday with me to finish the school timetable. I was finding it very stressful and I was looking down a barrel of having to keep going until the mortgage cleared itself when I reached 65,” he says.

His income has reduced from pound;2,700 a month take-home pay to a pound;1,300 pension, but the lump sum has greatly reduced his mortgage.

“The media is talking about taxpayers being forced to pay our pensions, but what they have forgotten is that we have paid in for years. I paid into the scheme for more than 30 years and topped it up with additional voluntary contributions of just over pound;100 a month for 20 years. I have worked out that the additional contributions I made over and above the normal pension deductions amounted to pound;28,000. When I retired they were worth just pound;40,000, which is hardly a great return,” Mr Smith says.

“The amount they are saying that teachers get in pension is laughable. If you look at the money flowing in from current teachers and flowing out to retired teachers, it is very close to being balanced,” says Mr Smith.

And that’s the rub: contributions from teachers and employers do not go into a pot to be reinvested and bring in returns. Instead they go into the public purse as income. Retired teachers are paid out of general income and the big question has been whether the amount being paid in by working teachers is enough to pay the pensions of retired ones.

This is what teaching unions say was at the root of the recent industrial action. The Department for Education is required to review the assets and liabilities of the scheme not less than once every four years. The last review was published in November 2006, based on the scheme as it was on 31 March 2004, and led to the reforms to help balance the money going in and out.

“The Government hasn’t valued the scheme since 2006 and the valuation is now 18 months overdue. We are asking for a valuation to be done so we can see whether it is necessary to increase contributions and, if so, by how much,” says Usman Gbajabiamila, the ATL’s policy adviser.

“Rather than the Government arbitrarily picking figures out of the air, we want a valuation on the basis of which the decisions can be made. We have already made huge changes to the scheme and the Government’s proposals are led by economic pressures to reduce public spending, not to make sure we have a good scheme for members,” he says.

The Department for Education says all scheme valuations have been put on hold while the Treasury and the Government actuary consider how to implement the “discount” rate - the rate of return were the fund invested - the increased contributions and “wider long-term scheme reforms”.

Its spokesman says the Government was acting on the recommendations of the commission chaired by Lord Hutton. The commission carried out a review of public sector pensions, publishing an interim report in October 2010 and a final report in March this year.

“Lord Hutton concluded in his interim report that the discount rate being used for public sector pensions was at the high end of what is appropriate, thereby effectively understating the real cost of providing public sector schemes and resulting in members and employers paying a lower contribution rate than is necessary to meet the full costs of the scheme,” says the DfE spokesman.

Lord Hutton’s inquiry said there was a need to redress the balance of contributions between employers and teachers, but it didn’t say it was unaffordable, says Mr Gbajabiamila.

Furthermore, in May this year, the Commons Public Accounts Committee said the changes to public sector pensions already agreed in 200708 were likely to reduce costs to taxpayers by pound;67 billion over 50 years, with costs stabilising at about 1 per cent of gross domestic product and 2 per cent of public expenditure. “This would be a significant achievement,” said the committee’s report on the impact of the 200708 changes to public sector pensions.

Lord Hutton also talked about taking away the right of private sector employees to join public sector schemes - a measure which, if adopted, could affect teachers in independent schools.

Pat Kyrou, a former physics teacher at Bancroft’s, an independent school in Woodford Green, Essex, was one of hundreds of people who took to the streets in Chelmsford on the day of industrial action in June.

“If contributions go up and benefits go down then young teachers will not join the scheme, especially when they are coming out of university with huge debts to pay off. If that happens, then the Government will have effectively scrapped the scheme because there will not be enough money coming in to pay the pensions of retired members,” she says.

Ms Kyrou received a lump sum of about pound;30,000 on her retirement at the age of 60 and gets a pension of pound;14,000 a year, after paying extra into the scheme to boost her benefits. She says: “It’s nothing like the sums being talked about, but it’s much better than people are likely to get in future if all these changes go through.”

CASE STUDY: FREYA DALGLEISH

After 25 years in primary teaching, Freya Dalgleish retired at 55 from Tedburn St Mary School in Devon. Her pension, well under pound;10,000 because she had worked part-time to bring up children, was not enough to live on. She took a part-time job as a dental receptionist, then worked as a community enabler for the deaf and in a hostel for unmarried mothers before going on to work for a national charity.

Now she has the career she wanted: as an artist specialising in wildlife portraits. She has had her first exhibition in Topsham and has won a national award.

“I studied at Falmouth Art School, but my father thought further education was wasted on women so I started working at a bank. Later, I explained to my Dickensian boss that I was going to train to be a teacher where the glass ceiling didn’t dominate the skyline.”

CASE STUDY: CHRIS WARNE

Chris Warne resigned as head of Severne Junior and Infant School in Birmingham at 54, after 33 years teaching, 22 as a primary head.

He couldn’t see himself on a golf course. “I wanted to step down into retirement by trying something different. I was in the fortunate position of being married, with the mortgage paid off and both my daughters with careers.”

He trained as a school improvement partner (SIP) and soon had 19 schools in Birmingham on his books, and 10 in Cornwall, where he was born. When the scheme was scrapped, Cornwall decided to continue using SIPs at the request of its schools.

Half a dozen schools in Birmingham also continue to use him as a consultant. He’s not earning as much as he was as a headteacher, but it is enough to live on - and take holidays outside of school vacations.

“The chance to visit so many schools and see so many impressive heads and teachers has been an eye-opener,” he says.

“I used to think that Birmingham was a leading-edge authority. Now I’ve seen how others do it, things look a bit different,” he adds.

HOW TEACHERS’ PENSIONS WILL CHANGE

Already in place

The method of calculating pension payouts has been switched from the retail price index to the consumer price index, which is generally lower. Lord Hutton’s (pictured right) pension commission has estimated that this will reduce teachers’ pensions by about 15 per cent.

In response to the 2006 actuarial review of the teachers’ pension scheme (TPS), the unions agreed the following changes with the Government:

- A rise in the pension age to 65 for new members only.

- Benefits for new members to be calculated at the rate of one 60th of final salary, compared with one 80th.

- A lump sum of three times annual pension for existing members. New members will lose pound;1 of annual pension in exchange for pound;12 of tax-free lump sum up to a maximum of 25 per cent of fund.

- A rise in the members’ contribution rate from 6 per cent to 6.4 per cent.

- A rise in the employers’ contribution rate from 13.5 per cent to 14.1 per cent.

- From the next actuarial in 200910, the employers’ contribution will be capped at 14 per cent.

- Cost increases or savings resulting from future valuations will be shared equally between members of the TPS and their employers.

The above changes are for those joining the TPS from 1 January 2007.

Recommended by the Hutton review

- An increase in members’ contributions to address the imbalance between the amount paid in by employers and teachers.

- Final salary scheme should be replaced by the average earned over a career.

- Teachers’ pension age should be the same as the state pension age.

- A cost ceiling for how much should be contributed out of public funds.

Changes to the pension age

- The normal pension age for the scheme is to be increased to be in line with the state pension age. Benefits built up before the change would be payable at 60. Benefits built up afterwards would be payable at the new retirement age.

- The state pension age is increasing in stages to reach 65 in November 2018. The Government proposes to increase the rate of change between April 2016 and November 2018.

- The Government proposes to raise the state pension age for men and women to 66, in stages from December 2018 to April 2020.

- Changes to the law under the last government provide for the state pension age to increase to 67 between 2034 and 2036 and to 68 between 2044 and 2046. The present Government is reviewing this change to the timetable.

- Teachers aged 33 and under would need to work until the age of 68 for a full pension. Anyone aged 57 and under would have to work to 66, and those aged 42 and under to 67.

CASE STUDY: KEVIN MCALEESE

Kevin McAleese, 64, had to make tough decisions as the headteacher of Harrogate Grammar School, but none quite so painful as the life and death dilemmas he now faces in the NHS.

Since taking early retirement in 2002, at the age of 55, Mr McAleese has set up an education consultancy, Northern Education; chaired an RAF British American Committee; and been appointed chairman of NHS North Yorkshire and York Cluster, one of the largest primary care trusts with a turnover of pound;1.6 billion and a staff of 4,500.

Part of his work is to chair the complex case appeals committee of senior doctors that rules on ethical issues and unusual requests for treatment. In one recent case, the committee had to decide whether the parents of a terminally ill child could be offered the genetic screening of embryos to help them produce a “saviour sibling” as a bone-marrow donor.

The skills of headship and school senior leadership are hugely saleable, he says. “I would tell any person leaving education who wants a new challenge to register with the Appointments Commission. There are a large number of appointments, paid and unpaid, where the skills of a teacher would be welcomed.”

Original headline: Is this it?