The Department for Education will launch a consultation on the potential impact of public pension changes on schools funding.
A proposed change to the discount rate used to assess the current cost of future payments from the unfunded schemes will increase the bill for public sector employers to the tune of £4bn.
There are currently more than five million active members in the public service pension schemes, which cover the NHS, teachers, the armed forces, the police, firefighters, local government workers, judiciary and civil servants.
Nick Gribb, minister of education, said in a written answer to Parliament yesterday (18 October) that his department will launch a consultation shortly to seek views on this matter and "understand better the impact of the proposed changes to decide what action should be taken".
The department is considering providing funding to schools, including state-funded, non-maintained special schools and independent special schools, for the increased costs resulting from the changes to the valuation of pension schemes, he noted.
Funding is also proposed for those further education providers obliged to offer the teachers' pension scheme, he added.
After a cut in the discount rate from 3 to 2.8 per cent in the 2016 Budget, HM Treasury is now proposing to reduce it to 2.4 per cent, "to reflect the Office for Budget Responsibility’s long-term growth forecasts".
HM Treasury will be supporting departments with any unforeseen costs for 2019 to 2020, but the funding for the remaining years still needs to be discussed.
The impact of this change differs from scheme to scheme. For the Police Pension Scheme, this change could mean that forces in England and Wales might need to find an extra £417m by 2020 to 2021.
For the NHS Pension Scheme the future is clearer, as when the government announced its five-year NHS funding plan in June it was estimated that the cost to meet this pension change would be £1.25bn a year, said Stephen Barclay, minister of health and social care, in another written answer to Parliament.
He added: "The government has committed to fund any further cost pressure arising from actuarial revaluations within the five-year period of the settlement, should it be higher than £1.25bn."
maria.espadinha@ft.com
