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Farrer & Co | Department for Education opens consultation on phased withdrawal from the Teachers’ Pension Scheme

The Department of Education (DfE) is consulting on a proposal to amend the Teachers' Pension Scheme (TPS) rules so that independent schools could opt out of TPS participation for future teaching staff whilst allowing existing staff to remain as active members (ie a “phased withdrawal”). The consultation was announced on 9 September 2019 and comes in response to concerns raised by independent schools over the increase to employer contributions by members of the TPS, which took effect on 1 September 2019. The proposal is aimed at allowing some schools to remain in the TPS with the knowledge that, over time, the costs associated with the scheme would reduce through natural staff turnover.

Proposals

The following proposals are the subject of the consultation process:

  • TPS regulations to be amended to allow an independent school to choose to keep its existing teachers in the TPS, while offering alternative pension provision to new teaching employees (including new joiners who were active members of the TPS immediately beforehand).
  • Existing members could remain in the TPS until they leave employment with that particular school, or join another fully participating school (ie not one that was undergoing phased withdrawal).
  • A teacher who was employed by a school at the time that participation was frozen but who opted out would be able to return to the TPS at a later date.
  • A teacher who opted out of the TPS after the independent school had frozen participation would not be eligible to return to the TPS and would instead be offered an alternative pension scheme.
  • For a teacher who was no longer in pensionable service as a result of sick leave or family leave etc:
    • where the period involved is covered by statutory rights or their contract of employment, they would be able to resume active participation in the TPS, or
    • in other cases, the school would be able to decide whether to allow the teacher to return to TPS or be offered alternative pension provision.
  • An independent school which chose to freeze participation would retain the option of returning to the TPS at a future date, but where a school did return, it would be required to enrol all eligible teaching staff from the date that it returned.

How to respond

Schools can download the consultation document and provide their views by completing the online survey here by 3 November 2019. The results of the consultation and the DfE’s response will be published sometime towards the end of this year on the government portal for policy papers and consultations.

The survey includes the following questions:

  • Do you agree that the phased withdrawal proposal will help independent schools to manage the financial pressures resulting from the additional costs of TPS employer contributions?
  • Do you agree that the phased withdrawal proposal will protect those teachers that are currently participating in the scheme?
  • Other than government funding, which the DfE confirmed will not be provided to independent schools at this stage, are there any alternative methods of achieving the aim of helping independent schools to manage this additional financial pressure while protecting existing TPS members?
  • Do you have any other comments regarding this proposal?

Clearly it would be in schools’ interests to respond to the consultation and lodge their comments by the 3 November 2019 deadline.

Those schools who are currently undergoing consultation with staff about a possible withdrawal may well wish to wait until the outcome of the Government’s consultation about phased withdrawal is known, before concluding consultation and deciding on the way forward.

If you require further information about anything covered in this briefing, please contact Hugh Young, or your usual contact at the firm on +44 (0)20 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, October 2019

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