Employers withdraw from the Teachers’ Pension Scheme

To date, over 218 independent schools with 7,707 members have left, or given notice of leaving, the Teachers’ Pension Scheme (TPS) since the last increase to the employer contribution rate was confirmed.

The TPS is a defined benefit, which means fixed contributions for employees and employer, backed by the Treasury. Employees are provided with certainty about how much they will receive in their pension and can draw on the scheme for life.

In September 2019, there was a significant increase to the employer contribution rate from 16.4% to 23.6%.

Unlike maintained schools, independent schools are not obliged to be in, or remain in, the TPS. It is somewhat ironic that, in 2011, the Government wanted to exclude teachers in independent schools from participation in the scheme. Teacher unions were vociferous in their campaign to ensure that teachers were not discriminated against in pension provision by virtue of the school or sector that they taught in.  The Government consequently dropped the proposals.

Membership of the TPS has long been recognised by teaching staff as an important element in their conditions of service.

It became clear to us at Voice Community that support needed to be given to members if their school was contemplating leaving the TPS.  On 17 March 2021, we hosted a webinar for members, giving practical examples of strategies for members to use during a consultation process by their school about potentially leaving the TPS, an actual case study and survey results from the wider membership.

Consultation Strategy
Ensure that consultation is meaningful, and that there is an adequate consultation period.
Request full details of all relevant financial and other information.
Be organised. Take a leading role with other Voice Community members in forming a representative staff body.
Ensure that it is not a passive exercise. Provide alternative ways to meet costs.
Emphasise problems of recruitment and retention if staff are invited to join other schemes that your employer might suggest.
There should be no discussion of firing and rehiring until the consultation is concluded.

The school initiated a consultation on withdrawal from TPS in January 2020. It was paused for a period during the coronavirus pandemic. An original leaving date was set for 5 April 2021. This was postponed until September 2021.

The employer did produce a consultation document and our Voice Community member led a staff group during the process.

Our member and his colleagues conducted their own analysis of the financial consequences for the school. Advice they provided to the governors was that a school such as their own  with a rising roll could afford to increase fees by around 3% to offset the increased employer costs of  the TPS.

The school did decide to go for an increase of 2.75 % in respect of fees. The staff team secured agreement from the governors to examine the existing salary structure within the school; research had shown that the current salary structure was less favourable than those of staff who worked in benchmark independent schools, with implications for recruitment and retention.

The consultation period is now over, and we are in the process of dealing with the decision to fire and rehire. Those staff who have declined the offer of a new contract have had their individual consultation, with union support, and have been asked to sign their contracts before the commencement of the Summer term, with formal notice of termination and the  immediate offer of re-engagement made from 1 September 2021. Teaching staff will be enrolled in a commercial pension scheme and be removed from TPS.

Our advice has been for members to accept the new contract “under protest” in order to keep our options open moving forward.

It is important to note that our advice may vary from case to case, so, if you are being consulted about leaving the TPS, it is important to contact us.

Member survey
In March 2021, we surveyed our members who are teachers in independent schools.

The snapshot survey of 19 teachers across independent schools provides an interesting insight into the flight of independent schools from the Teachers’ Pension scheme.

100% of respondents reported that their pension was in the TPS.  We are aware that there are a number of talks, discussions and negotiations which are currently ongoing.  We are also aware that that there are set dates when schools will have left the TPS and will have joined a new scheme.  Therefore, If the same group were to answer this question in six months’ time, it is highly likely that these answers would be different.

100% of teachers who responded said, given the choice, they would choose to pay into the TPS. This is statistically significant.  Respondents specified that the TPS offers them better security, a better return, and certainty that benefits will be paid for the rest of their life.

95% said that TPS offered them a good pension, while 5% said they do not know.

89% of respondents were aware of changes to the TPS scheme. 11% were not aware of recent changes.  This is reflective of the importance of pensions and the impact changes to pensions can have on the future of teachers.

We asked if there have been any recent changes to members pension, contract, or terms and conditions. 39% said that there have been changes to their pensions and 39% said there has not been.

Half of respondents who specified said that their employers were currently consulting with them about leaving the scheme.

We asked how changes were being implemented.

37% of respondents said there has been in-house discussion and 37% said there have been formal consultations.

We know that some independent schools are offering a higher salary in exchange for leaving the TPS, therefore, we wanted to find out what is more important for our members, a higher salary or higher pension.

To ask members, we used a scale of 0 – 100 (0 being a higher salary and 100 being higher pension). The average response was 66. This reveals that, on average, a higher pension is more desirable than a higher salary.

Analysing the responses further, we noted that if we were to discount the middle scores (45 – 55) the results were considerably different. 15% said a higher salary was important and 85% said a higher pension was more important.

If you are a member of Community and need help or advice, please contact us at help@community-tu.org or on 0800 389 6332.

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