FAQs – Teachers’ Pension Scheme
Why do independent schools need pension advice and state schools don’t?
Government pays the contributions of state schools, with the exception of academy schools, into the Teachers’ Pension Scheme (TPS) but independent schools have to find the contributions for teachers from their fees. In England, Wales and Northern Ireland, these currently stand at approximately 29 per cent and 26 per cent in Scotland. This financial pressure means private schools often seek pension advice to manage this risk.
What are private schools doing about the impact of the TPS?
The independent education sector is facing pressure from VAT on school fees, higher National Insurance contributions and the cost of the Teachers’ Pension Scheme. Of these, membership of the TPS is one of the risks they can control. Of around 2,500 independent schools in the UK, under 700 remain in the TPS as of January 2025.
How do independent schools provide a good pension for their teachers if they leave the TPS?
Each school is different and we have helped many make this transition with a consultation on what a change means for teachers, support staff and governors. Nothing can be implemented until the consultation is complete and the number of schools which have left is evidence that a realistic alternative to the TPS is not only achievable but acceptable.
Why do some private schools keep the TPS but offer another pension for newly recruited teachers and staff?
This is known as a hybrid solution, which suits some private schools who want to retain the TPS for existing teaching staff but seek to control the risk of rising contributions by offering an alternative, defined contribution pension scheme to newly recruited teachers. In many cases, support colleagues will also be in this pension scheme, which can be very competitive. For example, contributions can still be generous but cost the school and staff less by implementing salary sacrifice to mitigate the costs.
Why does retirement advice for independent schools matter? Isn’t it just about pay?
Putting in place the right pension scheme for private schools is, we would argue, critical for the school’s future. The right benefits may strengthen the school’s ability to retain valuable, experienced colleagues and can be attractive to those seeking to join. In the long-term, these features will support the school’s objective of offering a great education because they have great teachers on board.
How do we help independent schools with the TPS?
We’ve worked with many schools to consider if the TPS is right for them. Our specialist experience of both the schools pensions sector and the wider pensions industry means we are able to guide them on a way forward. This could take the form of an overall review of pensions for all staff or focusing on pensions for teachers. We’re not restricted as to what we offer in this regard so can research what works for your school.