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Pensions hike could cost colleges £142m

Funding for increased cost of pensions has only been promised until the end of the current spending review

pensions cost colleges DfE government funding budget

Funding for increased cost of pensions has only been promised until the end of the current spending review

The increase in employer contribution to the Teachers' Pension Scheme (TPS) could cost colleges an extra £142 million by 2020-21, according to the Department for Education.

In a tweet, Association of Colleges (AoC) deputy chief executive Julian Gravatt said the Department for Education “estimate TPS employer cost increase will cost colleges £142 mil, post-92 universities £142 mil and private schools £191 mil in 2020-21. I calculate this implies £1,275 mil for state-funded schools. DfE promises funding for state-funded schools and colleges but for how long?”

The TPS, which covers college staff, will be caught by government plans to raise employer contributions, with any changes taking effect from September 2019. The rate is due to increase from 16.4 per cent to 23.6 per cent – a rise of over 40 per cent.

While the DfE has said that it would provide funding to academies, maintained schools and colleges for the period covered by the current spending-review period (until March 2020), any future funding would depend on the next spending review.

The AoC has previously warned that the planned level of increase would “play havoc” with college budgets without full compensation for the higher costs.

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