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Need to know: Who will pay for teachers’ pensions?

Uncertainty on teacher pensions is 'jeopardising' schools' ability to plan budgets – as a DfE consultation ends tomorrow

Schools are being asked to increase their contributions to the Teachers' Pension Scheme

Uncertainty on teacher pensions is 'jeopardising' schools' ability to plan budgets – as a DfE consultation ends tomorrow

Headteachers were in disbelief that there could be yet another squeeze on budgets when they were they were told in September that the contributions schools make to teachers' pensions would increase by a whopping 43 per cent.

"Crippling" and "devastating" were among the words used by heads, while in the independent sector, it was feared some schools may even be forced to close.

A Department for Education consultation on the increase, and its proposals to provide extra funding to cover it, ends tomorrow (12 February). Here’s what you need to know.  

What is happening?

From September this year, there’ll be a rise of 43 per cent in the contributions schools must pay towards teachers’ pensions.

The increase follows the government's four-yearly review of public sector pension schemes. The current contribution rate is 16.48 per cent, which will rise to 23.6 per cent.

How much will it cost?

Schools minister Nick Gibb said in October that the estimated extra cost to state-funded schools will be approximately £830 million in the 2019-20 financial year and approximately £1.1 billion in each of the three following financial years.

The estimated cost for independent schools next year will be £110 million. 

Who's going to pay for that?

The DfE is proposing to fund the increase in state schools until at least April 2020. It will also fund the increase in extra contributions for "centrally employed teachers", who work in schools but are employed by local authorities. 

What about independent schools?

The DfE has said it will not offer to support independent schools with the increase.

As revealed in Tes, the hike "may close more than 100 prep schools" and could leave up to 25,000 children without schools.

Julian Thomas, master of Wellington College, an independent school in Berkshire, said: "This has come entirely out of the blue. Any school that is clearly having to pay [43 per cent] more than it was is clearly going to have to think very carefully about how it funds this.

“Schools like Wellington are in a robust financial position and will be able to deal with this, but there will be some very serious issues."

But state schools will be OK?

For the first year, yes. But it’s not certain who will fund the increase after that.

Geoff Barton, general secretary of the Association of School and College Leaders (ASCL), said he would be seeking assurances that funding would cover the cost of the increased contribution rate "in full" not just for next year but for future years.

He said: “Schools and colleges are very concerned about the potential impact of this. They cannot afford yet another unfunded cost on budgets which are already under severe pressure.”

Julia Harnden, funding specialist at the ASCL, said the uncertainty about funding after the first year was “jeopardising” schools’ ability to plan budgets.

She said: “It is frustrating that there is so much uncertainty about what will happen after the first year.”

Headteacher Jules White, coordinator of the WorthLess? campaign, which organised a march of 2,000 headteachers on Downing Street in a protest over funding, said: "It is difficult to believe that the government would deal another devastating blow to our already crippled budgets."

What are the benefits?

The DfE says the changes will provide teachers with "one of the best pensions in the country."

A DfE spokesman said: “The public sector pension changes announced by the Treasury will mean better benefits for teachers and staff working throughout our education system – making these changes now will ensure that the schemes remain sustainable in the long term and continue to provide teachers with one of the best pensions in the country.”

What happens next?

The DfE hasn’t said it won’t fund the increase beyond next year but that this “is a question for Spending Review 2019”.

It’s consultation, which ends tomorrow (12 February), asks school leaders and teachers to give their view on its “proposal to support certain education institutions with the increase to the Teachers’ Pension Scheme in 2019-20”.

It says it will use the results to understand "the impact on institutions".

The next valuation of the Teachers’ Pension Scheme is due in 2022-23.

 

 

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