Workplace pension provider TPT Retirement Solutions is launching a pensions scheme for the education sector to help struggling employers who are facing a hike in contributions to their scheme.
The new Pension Scheme for the Education Sector, which will be open to employer applications from March 1, 2019, will include both defined contribution and defined benefit pension provision, to give both "employers and members the flexibility to meet their needs," TPT stated.
Currently, public and private schools all contribute to the Teachers’ Pension Scheme, making it easier for teachers to move between the two sectors.
But employer contribution rates to public sector schemes are set to increase up to 13 per cent during 2019, due to lower growth in the economy.
This has led some private schools, which are having to self-fund their schemes, to consider setting up alternative arrangements.
In September, the government announced it would be changing the rate used to calculate the liabilities of public sector schemes "to reflect the Office for Budget Responsibility’s long-term growth forecasts".
Martin Clarke, government actuary, said total employer contribution rates could increase by between 5 and 13 per cent of pensionable pay as a result, the exact amounts depending on the scheme.
These rates will be paid from April 2019 to end of March 2023, and the government's actuary department will calculate the employer contribution for each scheme as part of its valuations.
Sir Steve Webb, former pensions minister and director of policy at Royal London, explained that until now, most teachers have been able to stay in the Teachers Pension Scheme even when they moved to a private school.
He said: "But the hike in employer contributions, which private schools are having to self-fund, has led many schools to decide that they can no longer continue.
"Many are consulting on setting up alternative arrangements for their teachers. These are likely to continue to involve a large employer contribution, but will probably be on a DC rather than a DB basis."
Mike Ramsey, chief executive at TPT Retirement Solutions, said: "Many schools are facing a large increase in their contributions to the Teachers’ Pension Scheme later this year, and our new scheme offers schools and educational organisations an option that includes both DC and DB provision.
"We already work with over 200 schools and look after the pensions of over 25,000 people working in the education sector. This is an exciting step forward for TPT as we grow our business and we look forward to working with more schools."
TPT, which specialises in offering a DB master trust, caters for 300,000 members and has assets under management worth more than £10bn.