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STOP PRESS - Government Responds to Teachers' Pensions Consultation

on Friday, 12 April 2019.

On 10 April 2019, the Department for Education (DfE) published its response to the consultation on proposed increases in employer contributions to the Teachers' Pension Scheme (TPS).

For independent schools there are two important aspects to this response:

  • The DfE will consider allowing independent schools to withdraw from the TPS on a phased basis.
  • Independent schools will not receive government funding for the increase in employer contributions.

Teachers Pensions Scheme FAQs

In responding to the consultation, the DfE has stated that it is seeking to address cost pressures identified by independent schools as a result of the increased employer contributions, a desire for independent schools to attain greater flexibility over their status in the TPS, and the increased risk of redundancies.

Phased Withdrawal

The DfE has confirmed that it will consider allowing independent schools to close the TPS to new entrants, whilst retaining current members in the scheme. This approach would be optional for independent schools. The DfE's response refers to the TPS being closed to 'applications' from teachers yet to join the school. Whether or not there will be an actual 'application' process is yet to be seen.

In respect of permitting phased withdrawal, the DfE will commence a period of statutory consultation in due course.

If adopted, independent schools will have three options:

  • Remain in the TPS for all eligible employees, absorbing any increase to employer contributions.
  • Withdraw entirely from the TPS.
  • Phased withdrawal.

The DfE's proposal may well be met with a mixed response by the sector. On the one hand it offers some mitigation against the liability created by the proposed increase to employer contributions and may be a compromise supported by staff.

On the other, schools will still have to shoulder the significant liability as a consequence of the most recent increase in employer contributions. The consultation published in January 2019 estimated that the increased cost to independent schools for the 2019/20 academic year would be £110m. It is unlikely that phased withdrawal will significantly reduce this figure, if at all. Any school considering withdrawal from the TPS will still therefore need to scrutinise the financial viability of remaining in the scheme, even if only for existing members.

Any schools that have commenced, or are about to commence, consultation with staff on a proposal to withdraw from the TPS should take into account the DfE's response. Whilst further statutory consultation will take place, by proposing a mixed economy questions will undoubtedly be raised by staff and unions during consultation which will significantly impact on the dialogue, particularly for those schools proposing withdrawal entirely. Staff and their representatives will most likely want schools to thoroughly explore phased withdrawal.

We are currently supporting lots of schools with considering their positions in respect of the TPS. If we can be of any assistance to your school please contact Naseem Nabi on 0117 314 5630 or Nick Murrell on 0117 314 5627, or complete the form below. 


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