Teachers' Pension Scheme - What Now?
Many independent schools we are working with are exploring alternative options to the Teachers' Pension Scheme (TPS).
We have developed materials to support schools, including FAQs and a table of options, which are freely available on OnStream.
Our article last term looked at five options for schools to consider, and we have picked out a couple of points that we thought it would be helpful to highlight.
The increase in employer pension contributions to 23.6% takes effect from 1 September 2019. This does not necessarily mean that schools that are now having to meet this level of contribution are not able to put in place an alternative provision with a lower employer contribution rate in future. This will depend on the strength of the business case and the consultation process.
Nevertheless, to help counter such an argument and manage employee expectations we would recommend that schools write to staff to make this clear and help preserve their position. Visit our OnStream portal now to download your free template letter to staff.
We have also seen an increasing number of schools exploring the possibility of offering an alternative defined contribution scheme alongside the TPS and giving teachers the option of choosing which they would prefer to join.
In order to manage costs, those opting for the TPS would need to accept a lower level of pensionable pay. Those opting for a scheme with a reduced level of pension contributions (or opting out entirely) would receive a higher level of take home pay. Although this is more challenging from an administration perspective, it provides staff with real flexibility, means that you do not need to withdraw entirely from the TPS, whilst helping manage the increased cost burden.