Independent schools could be allowed to partially leave the Teachers’ Pension Scheme following warnings that a 43 per cent increase in employers' contributions could force some out of business.
The solution would mean the Department for Education allowing private schools to deny new teachers the benefits of the scheme.
The government announced last September that schools will see the amount that they have to pay into the TPS rise from 16.48 per cent to 23.6 per cent in September 2019.
The DfE today confirmed that it would cover the additional costs of state-funded schools for 2019-2020, but that it would not cover the costs of independent schools.
Need to know: Who will pay for teachers' pensions?
The department today published the outcome of its consultation on the issue, which received 360 responses from the independent school sector.
The document says that “218 respondents cited wider cost pressures, such as fee rises and the long-term affordability of Teachers’ Pension Scheme membership”.
Rise in teacher pension costs
It adds that 57 said that their institution could close as a result of the increased pension costs.
In its response, the DfE says it notes the cost pressures that the increase in employers’ contributions will place on the sector, as well as “the desire from independent schools to attain greater flexibility over their status in the scheme”.
It says that although 28 per cent of responses from the independent sector wanted the government to fund their increased contributions, the “main focus was… on independent schools’ continued membership of the scheme”.
The document says: “By way of a potential mitigation to the risks identified, the department will begin work to consider allowing independent schools to leave the scheme via phased withdrawal.
“This potential phased withdrawal approach would enable a school to retain its current teacher members in the scheme but would close the scheme to new entrants.”
The document adds: “This approach would be optional to all independent schools who are members of TPS.
“The department accepts there is a case for this and will consult with members, employers and other stakeholders at the earliest opportunity.
“A statutory consultation would be required before any amendments to the scheme regulations are made.”
The consultation response goes on to outline the benefits of the TPS, including “guaranteed, inflation-proof retirement income based on what [teachers] earn over their careers” and “insurance for family members, flexible retirement and ill health support”.
It adds: “The department aims to ensure that teachers can move freely between state and independent school sectors and believes that continued TPS membership supports that aim.”
Mike Buchanan, executive director of the Headmasters' and Headmistresses' Conference, told Tes that he was pleased that the DfE intended to consult on moving towards a “mixed economy, in other words having people in and people out”.
He added that while, generally, schools would not want to move away from the TPS, the imminent hike in contributions and the fear of future increases were unsustainable for many.
Mr Buchanan warned that the increase in employers’ contributions would limit the ability of independent schools to deliver some of the DfE's priorities, such as working with state schools and offering free or nearly free places for disadvantaged pupils.
He added: “That’s bound to happen because in many cases schools are having to find hundreds of thousands of pounds that they did not expect to find, so certainly that will affect what they do and what resources they have.”