Teachers’ Pension Scheme – the latest developments

The Teachers’ Pension Scheme (TPS) continues to stay in the headlines with an ever-increasing number of independent schools exiting and strikes at some prominent institutions. In this article we look at some of the most recent developments.

How many schools have left now?

The current estimate is that around a quarter of independent schools have left the scheme. A freedom of information request at the end of 2021 indicated that 287 schools had left but the figure is almost certainly now higher still.

Why are there now more strikes?

Unions have adopted an increasingly aggressive posture in recent months with strikes at several schools. The most prominent of these has been at the Girls’ Day School Trust (GDST) which has been consulting on moving its network of 23 independent schools out of the TPS. Strike ballots (and often requests for union recognition as well) have been a tactic in the armoury of unions for some time but there does now appear to be an increased willingness not just to ballot for strike action, but actually carry it out as well.

Another factor in this is perhaps the increased willingness of schools to take threats of strike action on and push on with their proposals even in the fact of the inevitable disruption it causes. Previously, several schools faced with threats of strike action had decided to shelve their plans to leave the TPS. Now, with Covid and other financial pressures (such as the new Health and Social Care Levy) biting, there is a greater determination to make difficult decisions to control/cut unpredictable pension costs in order to place independent schools on a sounder long-term financial footing.

Is ‘fire and re-hire’ permitted?

One of the particular targets of union ire is the practice of so-called ‘fire and re-hire’, sometimes known as ‘dismissal and re-engagement’. This is a method of changing terms and conditions whereby the employer gives all employees notice of dismissal but then simultaneously gives those same employees a fresh offer of employment on the new terms to take effect the day after notice expires.

This ensures that there is no break in continuous service and the new terms become effective. In order to head off any employment tribunal claims, it is vital that a thorough process of information and consultation is conducted before any dismissals take place and the first choice would always be to agree the change to the new terms voluntarily, with giving notice of dismissal and an offer of re-engagement a last resort.

Acas recently published advice on this practice which emphasised the importance of trying as hard as possible to reach voluntary agreement first before it is used.

Are many schools using ‘phased withdrawal’?

Phased withdrawal became available as an option from 1 August 2021. It allows schools to close access to the TPS to new starters whilst keeping current teachers in the scheme. It depends on staff turnover to reduce the burden of staying in the TPS which means that any financial savings would only be gradual. There is also a concern about creating a two-tier workforce with some teachers in the TPS and others not.

However, several schools looking at controlling costs in the medium and long-term have chosen to go with this option, sometimes in combination with another option such as the hybrid model (where teachers stay in the TPS but have to bear the costs of increased employer contributions themselves).

What developments are expected in the future?

The most significant development is likely to be the announcement of the new contribution rates which will be implemented in April 2024. It is widely expected that both employer and employee contribution rates will rise yet further which is likely to trigger yet more schools into consulting about leaving the TPS.

How Moore Barlow can help

We offer a range of fixed fee packages for tailored advice and support through TPS consultations. See here for more details.