The number of private schools opting out of the Teachers’ Pension Scheme to avoid a significant hike in contributions has increased by more than a third in the last six months.
According to a Freedom of Information request submitted by specialist advice firm Wesleyan to the Department for Education, since September 2019, when contributions to the Teachers’ Pension Scheme increased by 40 per cent, the number of schools opting out of the scheme has increased by 34 per cent.
Since September 2019, 27 schools have notified the Department for Education of their intention to withdraw from their pension schemes, bringing the total number of withdrawals from the scheme since the changes were first announced in September 2018 to 107.
Last year, employer contributions increased from 16.48 to 23.6 per cent following the government’s announcement that it would be changing the rate used to calculate the liabilities of public sector schemes.
And while the government decided in April to fund state schools and further education colleges to the tune of £830m and £80m respectively, private schools will have to find their own funds to cover the additional cost.
It has been confirmed by the National Education Union that some teachers at private schools plan to stage walk outs this week over the changes to the scheme.
Parminder Gill, advice policy consultant at Wesleyan, said: “Independent schools are having to look more closely at their budgets, and examine options like increasing fees, to establish if they can afford to maintain their membership of the TPS. For some, the numbers simply don’t add up.
“When the 40 per cent increase in contributions took effect in September last year, some independent schools adopted a wait and see approach, but now many are deciding to walk away from the scheme all together.
“We have seen an increase in demand from schools who want to give their staff transparency about the situation. If an independent school withdraws from the TPS, it is essential that teachers understand what this means for them and their long-term retirement plans.”
He added: “While retirement may feel like a long way off for some, it is worth noting that very few schemes will be as generous as the TPS because it is guaranteed retirement income, directly linked to a teacher’s salary and service with clear employer and employee contributions outlined.
“Contributions and retirement income of alternative schemes that many teachers will be exploring are less certain and can add more complexities to retirement planning.”
Former pensions minister Sir Steve Webb has previously warned private schools opting out of the scheme to seek help from an adviser before making alternative arrangements.
Sir Steve said: “This is a complex business, and there’s no single solution that will necessarily be right for all schools. Teachers will expect their schools to have taken advice and shopped around for the scheme that best meets their needs.”
amy.austin@ft.com
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