In July 2020 the Chancellor announced various public sector pay rises...

...teachers will receive 3.1%

In July 2020 the Chancellor, Rishi Sunak, announced a raft of pay rises for workers in the public sector, reflecting the vital contributions they make across society. In addition to the Armed Forces and some (though not all) NHS workers, one of the main groups receiving the rise is teachers.

In fact, teachers will receive the largest rise, at 3.1% - which some might say is a long overdue recognition of their hard work (I suspect my kids’ teachers would agree).

But whilst they’re great news for the teachers and other public sector workers who’ll receive them, the rises do leave independent schools with a quandary.

What's the issue?

Each independent school must assess their own situation and decide on what, if any, pay increases they will offer their staff. At a time when many independent schools are reporting revenue challenges, the pressure to keep salaries and associated salary-related benefits competitive with state schools and other independent schools could lead to a further tightening of purse strings.

Pension costs, which are typically the highest staff cost after salaries, appear to be the prime place schools are looking to manage, and in some cases reduce, costs.

In fact, 177 independent schools are now reported to have left the Teachers’ Pension Scheme, up a massive 56% since March this year.

With the increased costs of the Teachers’ Pension Scheme (TPS) and its Scottish equivalents (the Scottish Teachers’ Pension Scheme and Scottish Teachers’ Superannuation Scheme) increasingly coming to the fore, independent schools who participate need to think carefully about the affordability of remaining in these schemes. A key consideration for many will be weighing up the relative value to recruitment and retention of staff between salary now vs. their pension in the future, potentially under a different pension scheme with lower and/or capped costs.

The opportunity cost of teachers' schemes

And with a mooted rise in employer pension contributions to 30% of salary for schools participating in the TPS/STPS/STSS, what will the ‘opportunity cost’ of staying in mean for your school?

Rewarding teachers for their hard work now is important - but keeping control of costs for your school is, too.

We appreciate how tough a time this is for independent schools, which is why we've developed a simple, cost-effective service to help support you through any pension changes you want to make. 

To find out more just click here - we'd be happy to help.

 


Related stories:

Independent schools reviewing their pension scheme options urged to shop around... Steve Webb, former Pensions Minister, encourages schools to take advice before choosing a new pension arrangement.

All that glitters is not gold... Final salary pension schemes offered to teachers across the UK are often lauded as ‘gold plated’, bu they don’t glitter quite as much as the label implies

 

Posted by Graeme Bell

Topics: Workplace Savings, dc pension schemes, occupational dc, schools

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