Academy pension hikes undermine DfE pay claims

Some schools have seen their pension contributions rise, despite the government’s reliance on falling costs to make this year’s pay award affordable, Tes analysis reveals.

The findings also show how savings in pension contributions can vary significantly between academies within the same trust.

The analysis follows the government’s announcement last week that an average 4.9 percentage point fall in employer contributions to the Local Government Pension Scheme (LGPS) meant that this year’s teacher pay award was affordable at a “national level”.

Special-school trusts see pension costs rise

Two trusts focused on special educational needs and disabilities provision are among the organisations where pension contributions have increased rather than fallen.

Orchard Hill College Academy Trust runs 12 special schools and one alternative provision setting across London, Surrey and West Sussex.

Seven of its schools are within the London Pensions Fund Authority, and the contribution rate for those schools increased from 7.1 per cent to 13.7 per cent - a rise of 6.6 percentage points, from 2025-26 to 2026-27.

However, three of its schools are in the Sutton pensions scheme, where contributions have fallen from 19 per cent to 16.8 per cent.

The trust’s employer contributions to the LGPS rose from £3.7 million to £3.8 million between 2023-24 and 2024-25, according to its latest accounts.

MacIntyre Academies, which runs four special schools in Oxfordshire and Warwickshire, has also seen an increase in the cost of contributions in one of its academies - from 16 per cent to 25.3 per cent.

The trust’s latest accounts show that employer LGPS contributions already rose from £626,000 to £674,000 between 2023-24 and 2024-25, although changes in the size of its support-staff payroll will also affect the amount paid.

Special schools typically employ a larger proportion of support staff - such as teaching assistants - than mainstream schools, meaning changes to LGPS costs can have a large impact on their payrolls.

Orchard Hill College Academy Trust employed 336 teachers in 2024-25, but nearly three times as many support staff. Similarly, MacIntyre Academies employed 46 teachers and 93 classroom support staff.

The Southfield Trust, which runs four special schools in Eastbourne, East Sussex, has also seen its contributions rise from 16.4 per cent to 17 per cent this year.

The trust employed 76 teachers in 2024-25 and 279 support staff. It paid £683,000 in employer contributions to the LGPS in 2024-25, up from £562,000 the previous year.

There are also mainstream trusts where pension contributions are rising. South Downs Learning Trust, a two-school trust in East Sussex, has seen its contributions increase from 14.2 per cent in 2025-26 to 17 per cent in 2026-27.

Huge differences within national MATs

The variations are also apparent within some of England’s largest multi-academy trusts.

Lift Schools, for example, has seen the rate at one of its schools in Essex fall from around 25 per cent to 22 per cent.

But the trust’s schools in North Yorkshire have seen a huge reduction of more than 17 percentage points from 2025-26 to 2026-27 - nearly 3.5 times the national average.

The trust runs 62 academies in 27 local authorities, and its schools are spread over 25 local pension funds.

Simon Newitt, chief financial officer at Lift Schools, said differing assumptions between pension funds meant schools could face very different contribution rates even when their underlying funding positions were similar.

The Essex fund, for example, chose to keep contribution rates higher than they otherwise might have been to protect itself against large market fluctuations, but this wasn’t the case for pension funds across the country.

For Lift, every one percentage point reduction in the Essex contribution rate was worth more than £200,000 a year to the trust.

Such variation did not affect how Lift allocated money between its schools, Mr Newitt said, but it reduced the amount available to spend overall.

“The lack of equity does not help,” he said, arguing that there needs to be stronger independent scrutiny of the assumptions used by different pension funds.

REAch2 Academy Trust, meanwhile, saw a reduction of around two percentage points in Suffolk, compared with 3.8 points in Kent and 4.6 points in Warwickshire.

Overall, REAch2‘s contribution rate decreased from 24.21 per cent to 20.95 per cent across all of its schools.

However, across all 18 funds that the trust covers, the variation has been “significant”, a trust spokesperson said, ranging from 1 per cent to 8.5 per cent. The trust has also experienced an increase in the contribution rate in one of its funds.

The overall picture represents an annualised saving of around £1.5 million for the trust, the spokesperson added.

Variation between schools in same fund

Being in a pension fund that has seen a large reduction does not guarantee that an individual school will receive the same benefit.

Tower Hamlets recorded the largest fall in average employer contributions among LGPS funds, at around 10.2 percentage points.

But LETTA Trust, which runs five schools in the London borough, actually saw its contribution rate rise slightly from 22.9 per cent to 23.3 per cent this year.

Three of E-ACT Multi-Academy Trust’s schools, all in the Greater Manchester pension fund, have seen their contributions decrease by varying amounts - ranging from 2.2 to 5.5 percentage points.

Steve Simkins, public services partner at pensions advice firm Isio, said the government’s announcement had “opened up a can of worms for the LGPS”.

He expects schools to become much more focused on future valuations because “no one will want to be paying more than average”.

This could ultimately create pressure for contribution rates to converge, potentially through a single LGPS fund for schools, Mr Simkins added.

Can big MATs smooth out the differences?

Large MATs can partly cushion the impact of variation in employer pension contributions by pooling their funding and redistributing money between schools.

This means a national MAT could centrally allocate resources to absorb higher pension costs in one part of the country rather than requiring the individual academy to meet them alone.

And this was the case with REAch2, which told Tes it was able to “absorb and smooth these variations across the trust”.

“This has largely mitigated any ‘postcode lottery’ impact at an individual school level and has made the budget-setting process relatively straightforward from a school perspective,” a spokesperson said.

But pooling does not remove the additional cost to the trust as a whole, and standalone academies or smaller trusts will be unable to spread the impact.

Savings may not last

There is also uncertainty about how long the savings from pension contributions will last.

Faye Reizopoulou, chief financial officer at Leigh Academies Trust, said the latest contribution rates apply only until March 2029, while teacher pay rises permanently increase schools’ salary bills.

“The pension saving being relied on to meet it is not [permanent],” she said.

“If they do [rise again], schools will still be carrying the permanent cost after the saving that made it affordable has gone.”

Mr Simkins said the government’s announcement had also come as a surprise because the latest pension savings had already been included in budgets.