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Teachers' Pensions - 5 Things Schools Should Consider Now

on Monday, 24 June 2019.

As we approach the end of the academic year, the imminent increase in employer contributions to the Teachers' Pension Scheme (TPS), will undoubtedly remain an agenda item for many schools.

In April 2019, the Department for Education (DfE) confirmed independent schools will not receive funding to meet the increased costs. Schools continue therefore to consider how best to meet this going forward. This article looks at some of the latest developments and learning points whatever point your school is at.

Communication with Staff

This is key in ensuring that you have the trust and confidence of your staff whichever route you opt for. Many governing bodies will have been discussing and evaluating the options in detail but will not necessarily have openly shared this with staff.

We would recommend that schools have a dialogue with their staff at an early stage to provide reassurance and avoid any surprises.

Consultation Body

We are aware that uncertainty around the TPS has led to renewed activity by the teaching unions, who are pressing to be recognised to represent staff in discussions around pay and pensions.

For those schools who have trade union recognition agreements in place, it is essential to understand the implications of these on the process and timing, should you be contemplating withdrawal from the TPS.

For all other schools it is worth consider arrangements for communicating directly with staff and whether there would be benefits in enhancing or formalising these to reduce the benefits that teachers may perceive come from supporting union recognition.

Alternative Options

Although the question of whether to remain in the TPS initially appeared to be a binary one, there are potentially some alternative options which we are working with some of our clients to explore.

The TPS rules are such that any school that offers the TPS has to make this available to all teaching staff. The DfE is currently consulting on whether to revise the TPS rules to allow for a "mixed economy" where new entrants could be offered an alternative scheme. Unfortunately, there are no details as to if, or when, this might happen, and what is meant by a new entrant.

The TPS rules do not prevent schools from offering an alternative pension scheme in tandem to the TPS but teachers would have the option of choosing which scheme to participate in. A number of schools have been exploring a "total pay and benefits" model under which the total pay is capped at a point which includes the value of employer pension contributions (and potentially other benefits).

This enables schools to keep control of cost and gives staff the ability to remain in the TPS if this is important to them, but receive less actual pay than staff who opt to participate in an alternative scheme with lower contribution rates.

To assist your decision making process, please:

Preserving Your Position

Any schools who have not withdrawn from the TPS by September will have to pay the higher contributions of 23.6%. There is some concern that this may undermine future business cases, based upon TPS costs not being sustainable going forward.

Schools have also raised concerns that if they meet the increased contributions, it may be harder to bring employer contributions back down if the school subsequently decides to go into an alternative pension scheme.

To help your school preserve its position going forward we would recommend that you:

  • revise  the pension clauses in offer letters and contracts for new teaching staff so that there is no contractual entitlement to participate in the TPS, even though staff will be able to do so whilst you offers the TPS

  • write to all teaching staff (perhaps with pay reviews) to clarify that the school should not be construed as having committed to 23.6% on an ongoing basis. We have worked with the ISBA to create a template to assist you with this.

Timing

All schools should ensure they have a clear grasp of the timeline needed to withdraw from the TPS, should they decide it is the time to do so, to incorporate both consultation requirements and contractual notice.

As all teachers need to leave the TPS at the same point, the longest notice periods will govern the timing. This is most likely to be the Head and other senior academic staff.

Ideally, agreement should be reached with these individuals and this should be documented in writing. There are two options:

  • a letter agreeing to vary the pension provisions in their contract

  • a waiver of the full notice entitlement so that any change can be aligned with other members of the teaching staff

We Can Help You

We are currently supporting lots of schools with considering their positions in respect of the TPS. We have a large team of specialist employment lawyers with TPS experience and are supported by experienced HR consultants Narrow Quay HR.


For specialist advice on the options available to your school, please complete the below form or call:
- Naseem Nabi on 0117 314 5630
- Simon Bevan on 
0117 314 5238
-
 Alice Reeve on 0117 314 5383

 

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