Reviewing your school’s Teachers’ Pension Scheme is more than asking: ‘how much?’

As independent schools continue to wrestle with increased contribution rates to the Teachers’ Pension Scheme (TPS), we are urging everyone to take a broader view of what lies ahead. 

Over the last five years, schools in England and Wales have experienced a 75% in contribution rates, rising from 16% to 28%. In Scotland, the equivalent scheme has seen a 50% increase, with rates approaching 26%. 

With a further valuation expected later this year, potentially leading to higher payments from 2027 onwards, bursars and their teams must now consider their next steps. 

VAT confirmed on independent school fees may be in the news, but the risk posed by the cost of the TPS remains. 

Clearly, consulting on whether or not an alternative pension scheme is feasible is often the response, but important TPS features can be routinely overlooked, as cost considerations tend to overshadow everything else. 

TPS benefits such as ill-health cover and death-in-service should not be underestimated as part of the overall value of any current defined benefit package. They need to be factored in as part of a 360-degree view for both your school and your teaching staff.  

And among the questions you should consider: is there a suitable alternative to these particular aspects? And, if so, are they at least equal, if not better, than what they may replace? 

It may seem an obvious observation but, in our experience, schools offering hybrid or phased withdrawal membership – with some teachers remaining in TPS while more recent recruits are enrolled into a defined contribution alternative – can overlook this detail. 

Without adequate research and due diligence beforehand, it may be the case that you are unable to insure a benefit included in your proposal which could damage your consultation process and, in turn, constructive relations with teachers and support staff: something everyone strives to avoid. 

Why raise this? We don’t need to tell you consultation is a complex, formal process. That’s why our advisers who specialise in working with independent schools include the expertise of our experienced health and protection team, who specialise in the employee benefits market including ill-health and death-in-service cover. 

Our goal is to ensure that everyone involved has a clear view of what they have now compared to what a realistic future package could look like from every pragmatic angle. With our expertise, we can help tailor this vision to fit your school’s unique needs. 

How much everyone will have in their pension pot will always be one of the most significant questions to answer, but we always go much further to provide schools, whether they are just starting or ahead in this process, with the essential insights and details needed to make informed decisions.