Pensions advice for independent schools
Teachers' Pension Scheme (TPS) costs are due to increase from April 2024. Higher contributions, combined with the risk of a new government imposing vat on fees and removing business rate relief, means the financial pressures on independent schools continue to build. These pressures mean now is the time to be assessing your TPS options.
Latest statistics suggest that as at the end of May 2023, 324 Independent Schools across England and Wales had withdrawn from TPS (since August 2019) and 6 had notified the Department for Education (DfE) of their intention to do so. A further 93 Independent Schools had applied to become Phased Withdrawal schools since September 2021.
Why consider your options now?
- Mitigate the risk of further TPS cost increases - costs are expected to rise significantly again in 2024. Current costs are 23.68% and it is expected that costs could rise by an additional 5% pa.
- Allow time for agreeing new strategy - there is a risk schools have insufficient time to agree and implement a new pension strategy between the announcement date and the increase date.
- Recruitment and retention impact should now be lower - the risk of being an early mover has largely disappeared now and, in our experience, retention and recruitment has not been particularly adversely impacted for schools that have exited.
How we can help
We advise over 100 third sector and charity clients, including independent schools. We have successfully guided many of our independent school clients through a TPS exit, right through from the business case to consultation and final implementation.
How do you run a successful consultation?
If you decide you want to develop a proposal for exiting TPS, it’s crucial to get that proposal and the accompanying consultation process right. From our experience of working with schools that have already exited TPS we outline the key milestones and outcomes from a successful TPS exit that we implemented in 2019.
| 7-Month activity window | Date (2019) |
|---|---|
| Initial advice given to the school | February |
| Decision made to run a consultation and offer a 2x matching DC scheme with a maximum employer contribution of 16%. Decided to open with an employment consultation to ensure process was complete by the end of the academic year. | April |
| Feedback on consultation. Agreed to improve the offer and pay a further 2% for one year. | April |
| Final decision to proceed. Teachers asked to consent to the changes | July |
| 99% teachers consented. Remaining 2 teachers left meaning notice periods didn’t have to be run. | August |
| August Left TPS and teachers enrolled in a DC scheme - support during withdrawal process with TPS. | August 31st |
Webinar on-demand
An update on your TPS options
In response to rising employer contributions, 330 independent schools have left TPS since September 2019. A further 93 have stopped putting new teachers in TPS by using phased withdrawal.
In this webinar, we share a market update, the challenges faced by schools looking to exit TPS and how to deal with them. We were also joined by Steven Edwards from Standard Life who share details of how Standard Life can support schools looking to set up a DC pension scheme.
Get in touch
If you haven’t started considering your TPS options yet, then now is the time to be doing it. Please get in touch to discuss your options and how you go about developing a proposal.
Subscribe to our news and insights
