Number of independent schools withdrawing from TPS doubles following contribution increases

The number of independent schools withdrawing from Teachers’ Pension Scheme (TPS) has more than doubled over the past year, according to a freedom of information (FOI) request from Wesleyan.

The FOI revealed that a total of 177 private schools have now notified the Department for Education of their withdrawal from the TPS, with 98 of these having left the scheme since September 2019.

Furthermore, 30 per cent of those who had withdrawn had done so since the onset of lockdown on 23 March 2020, with 53 independent schools opting out during the period.

Commenting on the findings, Wesleyan spokesperson, Parminder Gill, warned that the number of independent schools opting to leave the TPS is rising at an "alarming rate", with "thousands" of teachers being put into "less generous schemes".

The company explained that "majority" of these moves had been prompted by a rise in employer contributions from 16.48 per cent of salary to 23.6 per cent, announced by the government in September 2019.

Gill added that whilst there was an initial jump in the number of schools opting to leave the scheme following the rise in contributions, this had since "accelerated sharply" as schools got a clearer picture of what additional costs would be required.

He explained that, as lockdown had placed increased pressure on school budgets, "many schools" are assessing their TPS options to see if they can afford to maintain their membership.

Whilst the government previously confirmed that it would be covering the increased employer contribution rates for state schools in 2019-20, private schools are to meet the additional costs themselves, which has previously led to tensions between employers and staff.

Gill continued: “The TPS guarantees retirement income that is directly linked to a teacher’s salary. It is one of only eight guaranteed by the government and is inflation-proof to offer teachers a secure retirement.

“Any alternative defined contribution schemes that many teachers will now have to consider are far less certain, with both employer and teacher contribution rates significantly lower than those that teachers would have experienced within the TPS.

“As with any changes to your financial situation, it’s important that you explore these carefully with a professional adviser.

"For some, retirement might seem like a long way off, however ensuring that the right plans are put in place now can significantly benefit you in later life.”

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