Bridget Phillipson has told union leaders she is concerned that alternative pension schemes could lead to younger teachers making financial decisions without realising the impact on their retirement.
The education secretary has written to the NASUWT teaching union after it raised concerns with her about United Learning Trust’s plans to create a different pension scheme, in which teachers receive more take-home pay and less retirement benefit.
In the letter, seen by Tes, she describes the Teachers’ Pension Scheme (TPS) as “a great selling point of the profession and an important part of the overall remuneration package for teachers”.
She adds that any proposals to offer a different scheme for teachers would have to be approved by the department after the submission of a business case - which, she adds, has not happened.
It comes after separate reports claiming that the government had opposed United Learning Trust’s plans.
Phillipson ‘concerned about the potential impacts’
Ms Phillipson’s letter is a reply to the NASUWT, which in March contacted her about United Learning Trust’s plans and warned that “no teacher or school leader should have to sacrifice the value of their future pension”.
She tells NASUWT general secretary Dr Patrick Roach that her officials have been considering the matter.
Ms Phillipson adds: “Whilst the department supports innovative thinking that could help to attract new teachers, and retain those already working hard to educate the children of this country, which is what I understand proposals over pay and pension flexibility would aim to achieve, I would be concerned about the potential impacts if younger teachers over-prioritise an increase of headline pay without realising the impact on their retirement.
“I also recognise that if schools offered alternative pension schemes to the TPS, when they receive funding for employer costs, this would also have an impact on the Exchequer and other TPS employers given that it is an unfunded scheme.”
Dr Roach has described Ms Phillipson’s letter as a “rejection” of the United Learning Trust’s proposals, which he urged the MAT to fully withdraw.
However, the CEO of United Learning Trust, Sir Jon Coles, said he was pleased that the education secretary’s letter welcomed innovative ideas to attract new teachers.
Ms Phillipson’s letter, which does not directly mention United Learning Trust, adds: “The longstanding expectation is that teachers working in the public sector should participate in the TPS and any proposals to offer a different pension scheme would have to be considered and approved by the department, via the submission of a business case.
“The [Department for Education] has not received any business cases proposing flexibility around participation in the TPS and therefore I am unable to comment further on this.”
Pension scheme a ‘bedrock of teaching’
Dr Roach said: “The TPS is one of the bedrocks of the teaching profession and an essential component of any recruitment and retention strategy.
“We welcome the assurances we have received from the secretary of state that the Teachers’ Pension Scheme is an integral and vital part of the overall remuneration package for teachers.”
He added: “We now urge United Learning to withdraw fully from its proposals.”
Sir Jon said: “We also agree that all teachers should continue to be offered TPS, which is why they will be under our plans.
“Likewise, we agree that teachers currently in TPS shouldn’t move into an alternative scheme without being well informed, which is why we are offering any teacher considering a change access to free independent financial advice.
“However, one in 10 of our teachers under 40 has opted out of TPS without any alternative available. So we are addressing precisely the problem the secretary of state is worried about.”
He added: “At present, compensation of a teacher paid £35,000 (the minimum of our pay scale) costs roughly £50,000, of which a teacher with no student loan takes home roughly £25,000. The Teachers’ Pension Scheme takes £13,000 of this £50,000 from employer and employee combined.”
‘Good for teachers and for children’
Sir Jon indicated that teachers should be able to choose how much of their compensation to take as salary and how much as pension.
He said: “Under our scheme, the same teacher could be paid over £40,000 and take home roughly £32,000 - a 27 per cent increase - and still put 10 per cent of salary into pension benefits - three times the private sector norm.”
He added: “I therefore urge Patrick [Roach] to get on board with his members in supporting a scheme which we can see will be good for teachers and for children.”
As revealed in March, Tes understands that United Learning has been told that the government considers its pension plan to be “novel, contentious and repercussive”, and that the trust has been invited to submit a business case.
The DfE last month published guidance that advised trusts that they need government approval for any transactions deemed “novel, contentious and repercussive”.
Tes also revealed in March that the academy trust sector body, the Confederation of School Trusts, had raised concerns about this guidance.
A members’ briefing, seen by Tes, said: “We are concerned about the DfE guidance for several reasons, including the assertion within it that the DfE’s decision on such transactions is final.”
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