Exclusive: Two-tier teacher pensions warning

The DfE may allow private schools to partially withdraw from the Teachers' Pension Scheme but unions say this would be 'discriminatory'

pension

A “mixed economy” pension scheme for private schools, where recently-recruited staff will be unable to access the Teachers’ Pension Scheme (TPS), would “open up a can of worms”, a union has warned.

In April, Tes reported that independent schools might be able to partially leave the scheme after the government raised the level of employer contributions starting from September 2019, from 16.48 per cent to 23.6 per cent.


Background: Private schools could have 'phased withdrawal' from teacher pensions

Exclusive: Schools hit by 'devastating' rise in pension costs

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


The DfE said it would cover additional costs for state schools from 2019-20 but would not do so for the independent sector, prompting fears that smaller private schools might be forced to close.

Independent schools to be given pensions opt out?

The DfE is currently consulting on a proposal, developed in conjunction with the Independent Schools Council (ISC) and the Independent Schools Bursars’ Association (ISBA), to allow private schools to partly leave the scheme.

Currently, participating independent schools cannot offer TPS membership to some eligible teachers but not others – if a school leaves the TPS all of its teachers must leave. But the new proposal would allow existing staff to continue in the TPS while newly-recruited staff would be covered by an alternative scheme.

However, unions and independent school bodies have warned against the proposals.

Usman Gbajabiamila, lead policy adviser on pay and conditions at the NEU teaching union, said the introduction of a two-tier scheme was a “slippery slope”.

“We don’t think this is a good idea – you would have a two-tier pension scheme with some colleagues only able to access a scheme with far fewer benefits,” he said.

“Yes, the costs have gone up but that is not down to employees, that is down to government policy. We would prefer it if schools continue to offer TPS to all members of staff – we believe proposals of alternative schemes are not in any way as good.

“Schools that choose to go down this route will find it very difficult to recruit – it’s a slippery slope that will impact the long-term effectiveness of keeping the scheme open.

“And you will potentially be discriminating against younger members of staff in favour of older members.

“Employers will always try to cut costs. If independent schools go for a mixed economy, it will open up a can of worms which will be difficult to monitor and assess.

“As time goes on, schools may find they only have five or six employees on TPS, in which case they may just close the scheme completely.”

Chris King, chief executive of the Independent Association of Prep Schools, said: “We recognise that the current TPS is an excellent scheme and would encourage schools to continue to do it if they can afford to.

“A two-tier system may be attractive but may prove to be discriminatory.”

Mr King said this would also have a negative impact on these schools’ recruitment. However, he acknowledged that for the smallest private schools the rise in employment contributions represented a heavy financial cost.

“When you have a lot of financial pressures on schools it becomes very difficult for them to afford it. For the smallest schools it would seem more sensible to offer an alternative rather than a mixed economy.”

Julie Robinson, chief executive of the ISC, said the proposal under consultation would take pressure off schools that are finding it hard to meet the extra costs.

However, she said that this would only help schools that could almost meet these costs. Smaller independent schools that could not meet the costs at all would have to withdraw from the TPS completely.

So far, 62 schools have completed consultations with their staff to withdraw from the scheme.

“All eyes are really on the next couple of years and which other independent schools will have to do this,” Ms Robinson said.

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