There are warnings a rise in Teachers' Pension Scheme contributions could lead some independent schools to make alternative arrangements.
Employer contributions to the Teachers’ Pension Scheme (TPS) are set to increase by around five percent, taking the employer contribution rate to around 28.6 per cent, according to reports from the Independent Schools’ Bursars Association.
“Even if this increase is slightly smaller than some commentators were expecting, if it comes in to force it will be a significant challenge to the sector,” said Martin Willis, partner at consultancy Barnett Waddingham.
Employer contributions to the TPS – a public sector pension scheme – are set at regular valuations. The new contribution rates are likely to be implemented from April 2024.
Schools are facing many operational and financial challenges, from high inflation and energy costs to the potential for tax reliefs to be removed in future. As contribution rates increase, independent schools have indicated that they may leave the pension scheme and make other arrangements.
Willis added: “There are many options open to schools in this regard, from cost sharing and phased withdrawal to parallel options and TPS exit, with the right option for a given school very much dependent on its unique circumstances.”
