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TPS and Independent Schools - Phased Withdrawal Is Soon to Be a Reality

on Friday, 13 November 2020.

Readers will remember, the Department for Education (DfE) published its consultation proposal to amend the Teachers’ Pension Scheme (TPS) rules, enabling independent schools in England and Wales to opt out of TPS participation for future teaching staff...

...ring fencing on-going active participation to current teachers only. 

That consultation began on 9 September 2019 and concluded on 3 November 2019. The Government has now published its response to phased withdrawal for independent schools confirming its intention to legislate for phased withdrawal, with a proposed implementation date of Spring 2021.

Participation in the TPS is not a requirement in the independent sector, where schools do participate however, the school must enrol all eligible teaching staff into the TPS. The increased cost has seen a number of schools opt to withdraw from the TPS. Where this is the case, all teachers at that school can no longer participate in the TPS and become deferred members under the current regulations. The phased withdrawal proposal aims to provide independent schools with a degree of flexibility and choice, permitting schools in the sector to remain in the TPS whilst closing access to new recruits, moving away from the current purely binary approach. 

The regulations intend to provide for the re-enrolment of teachers into the TPS at a phased withdrawal school in the following limited circumstances:

  • Opted-out teachers - Where teachers had opted out at the time the school adopted phased withdrawal, those teachers will be entitled to re-enrol.
  • Active members - Where an active member is the subject of a transfer, for example following the merger of two schools, those members can be re-enrolled.
  • Members returning from non-pensionable leave -  This provision captures those returning from family leave or non-pensionable sick leave of up to five years. The example given in the response for this chosen length of time is those returning from extended maternity leave

A teacher moving from one phased withdrawal school to another phased withdrawal school however, other than in respect of a compulsory transfer, would not be entitled to be re-enrolled as they would be taking up new employment by choice. 

TPS has been on the agenda for many independent schools since the increase in employer contribution was first announced. Its value as a recruitment and retention tool will form part of that discussion and this is recognised by the Government in reaching the decision it has. That said, the response goes on to acknowledge that as savings against those increased costs will generally only be realised where there is staff turnover, the proposal may have limited financial impact in the first year following its introduction. Some schools may not have a regular turnover of staff, in which case its application may be of limited use. It may well even be a factor which teachers consider when deciding their career paths - might it actively discourage teachers from moving if their school currently offers TPS?  

This development will be good news for many independent schools, offering a degree of choice. It is undoubtedly a move to stem the immediate flow of those leaving the TPS.   

Should schools adopt phased withdrawal on its introduction the option to withdraw at some future point remains a choice if costs become more unwieldy. Another tool in a school's armour to better manage this is a welcomed addition.

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