Exclusive: Private school pension pull-out would leave £800m ‘hole’

DfE warned ‘many’ independent schools are considering leaving the Teachers’ Pension Scheme over payments hike
9th November 2018, 5:02am

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Exclusive: Private school pension pull-out would leave £800m ‘hole’

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Private schools would leave an £800 million “hole” in teachers’ pension pot if a planned hike in contributions forces them to pull out of the scheme, according to figures seen by Tes.

Schools were left reeling last month after being told their payments to the Teachers’ Pension Scheme (TPS) will rise by more than 40 per cent from September next year.

Internal calculations by the Independent Schools Council (ISC), revealed in emails seen by Tes, estimate private schools currently contribute £590 million a year to the TPS, around 10 per cent of the total.

Teachers, who on average put 9 per cent of their salary into their pension pot, contribute a further £225 million themselves.

Combined, the ISC estimates the TPS would be left with a “total hole in the order of around £815 million” if independent schools withdrew from the scheme.

The figures add to warnings that the potential hike in employer contributions to 23.6 per cent, up from 16.48 per cent now, could be the final straw for schools already struggling to make ends meet.

ISC chair Barnaby Lenon said the council’s members were considering leaving the scheme as part of a range of options to address the impact of the pension hike.

“There are many schools thinking about it but it will be impossible to say how many will eventually withdraw from the TPS,” he said.

“Nobody wants to withdraw from the TPS, but some schools may be forced to do so for financial reasons.”

Chief executive of the Independent Association of Prep Schools (IAPS) Chris King has written to chief secretary to the Treasury Liz Truss, warning that more than 100 preparatory schools could shut down because of the increase.

Mr King said as yet there was no sign there will be a mass exodus among the 700 members of the IAPS, but warned some schools may be forced to withdraw, making it harder for them to attract staff.

“It would make teacher recruitment that much more difficult as a result,” he explained.

“You’re going to have those schools asking themselves if they really want to continue if they’re not offering the kind of service they want to provide.”

Executive director of the Headmasters and Headmistresses Conference, Mike Buchanan, said the hike would leave many schools with a “large financial hole”.

“We would prefer to support the current scheme and stay alongside our colleagues in the state sector, but clearly schools have a duty to look at all the options,” he said.

“Those [schools] which are already squeezed are going to be further squeezed. It’s going to add significantly to the financial pressures on them.”

A spokesperson for the Department for Education said that if independent schools choose to participate in the TPS, “they must enrol all teachers”.

“Where an employee pays into a scheme the employer is required to contribute. Individual teachers can leave the TPS and make their own pension arrangements should they wish to do so,” she said.

“If an independent school and its staff chose to withdraw they would cease to accrue pension. Other TPS members benefits would be unaffected.”

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