Administration of the Teachers' Superannuation Scheme has been contracted out. Susannah Kirkman reports on the implications for its employees and potential pensioners. Teachers' unions have said they intend to monitor closely the performance of Capita Managed Services, which has just been awarded a seven-year contract to run the Teachers' Superannuation Scheme.
Robin Squire, the education junior minister, has pledged that the privatised administration of the Teachers' Pensions Agency will save the taxpayer Pounds 20 million, but the unions are worried that economies will be made at the expense of service to teachers.
"Our main concern is that the quality and standards of service we are used to will be eroded," said Barry Fawcett, assistant general secretary of the National Union of Teachers. "If a commercial organisation is running the scheme, the main aim will be to make a profit."
According to Brian Clegg of the National Association of Schoolmasters Union of Women Teachers, the Teachers' Pensions Agency desperately needs a new computer system so that it can print annual benefit statements for teachers. If Capita has to fund new IT, as well as find returns for its shareholders, Mr Clegg believes that the savings will have to come from staff cutbacks.
This view is shared by Susan Johnson, head of pensions at the Association of Teachers and Lecturers. "The privatisation of other industries has resulted in the service to the customer being worsened, not improved," she said. "The only way to make considerable savings is to reduce staff, which will reduce the number of people available to help teachers and will lead to demoralisation among the TPA workforce."
As an example of the dangers of privatisation, Mrs Johnson cites the fiasco which followed the decision to award a contract to a private IT firm. The company, Hoskyns Group plc, was supposed to develop software to monitor the Teachers' Superannuation Scheme, but the Department for Education and Employment was so dissatisfied with the results that it terminated the contract. The aborted contract is now the subject of litigation between the DFEE and Hoskyns, and the delay means that an actuarial review of the superannuation scheme which should have been completed in 1994 is still not ready. As a result, it is difficult to evaluate the National Audit Office's misgivings that the unprecedented increase in early retirements will put the superannuation scheme under severe strain.
Ironically, the managing director of Capita Managed Services, Paddy Doyle, was a manager at Hoskyns until September 1992, although he was not involved in the superannuation project.
In the light of the 68-per-cent increase in the number of teachers taking early retirement over the past decade, another concern for teaching organisations is Capita's likely approach to discretionary matters such as the handling of applications for premature retirement on health grounds. The unions are not convinced that it will be as easy as the Government claims to separate administration and policy, and the privatisation is adding to the fears they already have about the pensions scheme.
"In advance of privatisation, it has already become more difficult to take early or ill-health retirement and it has become less clear whether teachers are allowed to take jobs afterwards," says Brian Clegg.
The Mirror Group pensions debacle has heightened teachers' anxiety about the security of their pensions. "What safeguards are there to prevent a similar mess at the TPA?'' asked a worried Lancashire headteacher who wrote to The TES to express his doubts.
Given the level of concern, it is hardly surprising that the unions are scrutinising Capita's track record. Capita Managed Services is already heavily involved in the public sector. It is running the pilot nursery vouchers scheme and is a subsidiary of the Capita Group plc, which provides services for local authorities. Capita has cashed in on the privatisation bonanza by giving support to local councils ranging from IT advice to property management. It was the first company to help bill people for the poll tax. It runs the DVLA's personalised number plate scheme in Swansea and markets West Midlands bus passes. It is also responsible for the SIMS computer software used by 97 local education authorities to calculate school budgets and pupil numbers.
Since 1985, two years before the present Capita director, Rod Aldridge, presided over a management buy-out, the company's profits have soared from Pounds 57,000 to around Pounds 12.5 million. Until 1987, the company was part of the Chartered Institute of Public Finance and Accountancy, the local government professionals' body.
Rod Aldridge insists that, as 85 per cent of Capita's services are to the public sector, it cannot afford to let standards slip at the TPA, otherwise the company won't get any further local authority work.
Capita has told the TPA's 475 staff that there is no intention to move the service from Darlington the company is about to sign a seven-year lease on the building, according to Rod Aldridge.
But employees have been warned that the number of staff working on teachers' superannuation will be reduced. Rod Aldridge says that this will be achieved by increased efficiency and improved IT many TPA records are still on paper. He is adamant that Capita's aim is to attract other pensions work to Darlington, so that the workforce will expand, rather than contract, and he has promised that there will be no staff "movement" until 1999.
According to Mr Aldridge, the workforce involved in the management of payroll, pensions and council tax for Bromley Council has grown from 150 to 170 since the Capita take-over in 1993, although union records indicate that seven staff have been made redundant.
Paddy Doyle says: "Our track record says we actually improve quality; the way in which we reduce costs is not by headcount." But he admits that the company will have to work very hard to earn credibility among the TPA workforce and with the teachers themselves.