UK Edition
State school teachers are being offered higher salaries in exchange for giving up their generous pensions for the first time.
United Learning, the UK’s biggest schools group containing 92 academies, has written to teachers offering extra cash in return for leaving the Teachers’ Pension Scheme (TPS) and switching to a defined contribution (DC) pension scheme.
The amount employers must pay into teachers’ pensions rose five percentage points this year, but so far the Treasury has only agreed to fund the difference until 2025 – piling pressure on already stretched school budgets.
Opting out of the TPS has become common in the private sector, with around 400 schools either leaving or closing it to new staff since employer contributions were increased in 2019. Less than half of private schools are still members, with funding pressures blamed for helping to push up fees.
But this is thought to be the first time state school teachers have been encouraged to exit the generous scheme.
Unions branded the move a “short-sighted raid on pensions” and claim it could threaten the long-term stability of the entire TPS.
They have also asked the education secretary, Bridget Phillipson, to intervene by pushing United Learning to withdraw the proposals.
Currently, state schools must automatically enrol their teaching staff in the TPS. Teachers pay in between 7.4pc and 11.7pc of their salary, with a further 28.68pc added by their employer.
Each year, these contributions receive a boost equal to inflation plus 1.6pc. When they retire, the final pot is used to provide a set pension for life, which also rises annually with inflation.
State schools legally must offer TPS membership, but teachers can opt out.
United Learning will offer increased starting salaries in return for leaving the TPS from 2025.
Under the proposals, salaries outside London could jump from £32,850 to almost £38,000, and from £39,000 to £45,000 inside London. Teachers could pay 0pc, 5pc or 10pc into a DC pension pot, with their employer adding between 10pc and 20pc.
Paul Whiteman, of NAHT, said: “A good employer would not ask dedicated teachers to sacrifice part of their pension to make up a shortfall in their take-home pay.
“Having to choose to alleviate immediate financial difficulties in return for a reduced income in old age is no choice at all. It is ‘robbing Peter to pay Paul’ and risks destabilising the national TPS, which is reliant on the contributions of everyone who pays in.
“This short-sighted proposal is not the answer to the severe recruitment and retention crisis in schools.”
Daniel Kebede, of the NEU, said: “We see this move as detrimental to members and also a serious attack on the future stability of the TPS more widely, which would further damage already dire teacher retention rates.
“United Learning has been provided money by the Department for Education for 2024-25 to cover the increase in pension contributions and the NEU expects this subsequently to be folded into the National Funding Formula. This money is intended to cover the increase in TPS costs, not to be used by United Learning as it sees fit.
“We need fully funded pay increases for all educators, including those working in United Learning, not a raid on pensions which is an attack on deferred pay.”
On Monday, the two unions joined the NASUWT and ASCL in writing to Ms Phillipson demanding an urgent meeting and asking her to “encourage” United Learning to shelve the plans.
Emma Thompson, of law firm Thackray Williams, said: “United Learning says that there will be no pressure to opt out of the TPS. However, the implications of the proposed changes should be carefully communicated to staff and involve meaningful consultation to avoid legal challenge.”
The Department for Education was approached for comment.