Teachers’ Pension Scheme (TPS) Update – recent developments

The past few months have seen a number of developments regarding the on-going impact of increases in employer contributions to the Teachers’ Pension Scheme (TPS) on the independent schools sector.

It has now become apparent that significant numbers of independent schools have left (or are leaving) the TPS. As of 1 September 2019, 62 schools had already notified the Government of withdrawal and many more are in the process of consulting over withdrawal this Autumn Term

The Government has belatedly responded to these withdrawals by launching a consultation on a proposal to allow independent schools to opt out of the providing the TPS for future teaching staff, whilst allowing existing staff to remain as active members – the so-called ‘mixed economy approach’. This consultation closed on 3 November 2019 and the results are currently awaited.

A number of schools have been exploring creative alternative approaches including offering staff the opportunity to stay in TPS on condition of a pay cut and/or offering a defined contribution scheme alongside the TPS (the ‘dual pension approach’). However, for most schools these approaches will only partially address the 43% recent increase in employer pension costs and staying in leaves schools exposed to potential future increases as well (made more likely by the Court of Appeal decision in the firefighters and judges’ case in July).

Increasingly aggressive approaches by trade unions have also been a feature of consultations to withdraw from TPS this term. A co-ordinated approach is now evident in which trade union representatives express concerns over the impact on recruitment and morale, whilst hinting at strike action if the school decides to proceed with withdrawal. As a result, some schools have witnessed ballots for strikes over the TPS issue. The right approach to these challenges continues to be different for each school depending on its unique situation and financial circumstances.