Mind the funding gap

Photo: iStock.com/BrianAJackson

For most parents, teachers' pensions are unlikely to be something to which you would have given much thought. Julie Robinson looks at the significant issue of the teacher pensions shortfall and its impact on schools.

For most parents, the pensions of the teachers at your child's school are unlikely to be something to which you would have given much thought. But recent developments in government policy have put pensions firmly in the spotlight. At the end of last year, a new financial pressure suddenly and unexpectedly loomed over, not just independent, but all schools in the form of increased pensions costs for teaching staff and heads. With tight margins, tax and compliance costs are important factors in forecasting and this surprise move gives significant cause for concern. Quite apart from the general economic uncertainty around Brexit, we have seen Scotland move towards abolition of Business Rates concessions for schools which are charities – and now Wales is consulting on the same issue. So why are pensions significant?

The vast majority of teachers in the UK, including many prep school teachers (and heads), are members of the Teachers' Pension Scheme (TPS). Teachers working in a state-funded school in the UK are automatically enrolled in the scheme and in 2011 the principle of membership was re-confirmed when education unions and the Government agreed that there ought to be easy transfer between the state and independent sectors for those in membership of this scheme.

Recent changes to the Government-run TPS mean that costs will increase significantly for schools from September 2019, putting severe strain on budgets. Many schools will not have the reserves required simply to absorb these increased costs. School leaders and governors now face unpalatable choices. Do they remain in the TPS and find ways to afford these higher costs or do they need to consider consultations regarding alternative pensions provision?

Julie Robinson is Chief Executive Officer of the Independent Schools Council (ISC).