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Announcement of changes to the Teachers’ Pension Scheme employer contributions from April 2024

Posted: 07/11/2023

The long-awaited outcome of the Teachers’ Pension Scheme (TPS) revaluation was finally announced on 27 October 2023. From April 2024, the employer contribution rate will increase by 5% to 28.6%.

As affected schools will be aware, this follows a previous employer contribution rate increase in September 2019, from 16.48% to 23.6%.

This announcement comes at a time when independent schools are facing a number of challenges. The Labour Party has announced that if it wins the next general election, it will add VAT to private school fees within its first year, which is likely to affect future pupil numbers and income for some schools.

It is anticipated that this announcement could lead to many more independent schools considering their options, and whether the ongoing and increasing costs of the TPS can be justified moving forwards, or whether an alternative pension provision could be more appropriate.

The changes become effective in only five months. Given that a period of consultation with teaching staff will need to take place prior to any change being made, and taking into account that most teaching contracts will then require at least a term’s notice before any change can take effect, it is recommended that independent schools start considering their options now.  

If independent schools are unable to take action to mitigate the impact of this TPS contribution rise (alongside the potential introduction of VAT on school fees), parents of pupils at these schools could ultimately find themselves picking up the tab with fees having to be increased. 

ISBA’s (Independent Schools’ Bursars Association) latest freedom of information request to the Department for Education confirmed that, as of 21 September 2023, 460 independent schools had already left the TPS. Of these, 338 have withdrawn from the TPS completely, with 122 schools enacting a phased withdrawal.

It is understood that around a further 150 independent schools are currently consulting about ongoing participation in the TPS.

If you are an independent school currently participating in the TPS and would like advice on the alternative options which may be available and the processes which need to be followed to enact change, please contact our specialist employment team.

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