Almost a quarter of the independent schools within the Teachers’ Pension Scheme (TPS) in January 2019 have now left, a pensions provider has revealed.
A Freedom of Information request from Broadstone showed that independent schools continue to inform the Department for Education of their intention to exit the TPS.
On 1 January 2019 (ahead of the 43% TPS employer contribution increase effective from 1 September 2019) there were reportedly 1,171 independent schools participating in the TPS.
As of 23 November 2021, 287 independent schools had either already left the TPS or had notified the DfE of their intention to do so imminently.
This latest update shows a clear direction of travel has now been established. Neil Barton, head of business development at Broadstone, believes this trend will only pick up speed next year.
“We believe that this number will increase substantially again come summer 2022 as many schools have historically taken the decision to exit at the end of a full academic year, rather than part-way through one,” he said.
The confirmed number of exits doesn’t include independent schools that are managing their position in the TPS via methods other than a full exit from the scheme. These methods can help schools to manage their costs in the short to medium term.
“Schools will need to revisit this solution if a further change to the employer contribution rate is introduced – the earliest that this can now happen is April 2024, delayed by a year from April 2023,” said Barton.
Furthermore, 16 independent schools have requested phased withdrawal from the scheme, which allows a school to close the TPS to new members of staff (offering them a DC scheme instead) whilst allowing existing staff to remain in the TPS.
Barton added: “Estimates of the employer contribution from April 2024 vary from ‘no change’ (23.68% is retained) to a whopping 35% of salaries. At this stage though it is very difficult to predict the outcome and we await an update from the Government in the next 12 to 18 months. So, for now at least, it is a case of ‘watch this space’.”