- About us
- About colleges
-
Corporate services
- Corporate services
- Mental health and wellbeing
- AoC Student Engagement Charter
- Data Protection/GDPR
-
Employment Services - college workforce
- Employment Services - college workforce
- Employment: How we support members
- Introduction & Employment Helpline
- Absence & Sickness Management
- Contracts and T&Cs
- Disciplinary, Capability, Grievance & Harassment
- Equality, Diversity & Inclusion
- General Employee Relations & HR Issues
- Holiday/annual leave related
- Industrial Relations
- ONS reclassification related guidance
- Pay & Pensions
- Recruitment
- Redundancy, Restructuring & TUPE
- Safeguarding/Prevent
- Workforce Benchmarking, Surveys & Research
-
Governance
- Governance
- Governance: How we support members
- Governance Timeline
- Representation
- AoC National Chairs' Council
- National Governance Professionals' Group
- Code of Good Governance
- External Board Reviews
- Resources
- Governors Inductions
- Student Governor Inductions
- Student Governor Support Hub
- Guidance
- Hot Topics
- Governance Briefings
- Archive
-
Projects
- Projects
- Get Involved!
- Resources
- Contact the projects team
- Apprenticeship Workforce Development (AWD) Programme
- Creating a Greener London – Sustainable Construction Skills
- The 5Rs Approach to GCSE Maths Resits
- Creative Arts in FE 2024 – developing student voice through creativity
- DfE Multiply Capability Support Programme
- Digital Roles Across Non-digital Industries
- GCSE Resits Hub Project
- Pears Foundation Youth Social Action Programme: Phase Two
- T Level and T Level Foundation Year Provider Support Programme
- T Level Professional Development (TLPD) Offer
- The Valuing Enrichment Project
- Film London - Metro London Skills Cluster
- Resources/Guidance
- Sustainability & Climate Action Hub
- Partnerships
- Honours Nomination
- Brexit
- Ofsted Inspection Support
- AoC charters
- Recruitment and consultancy
-
Events and training
- Events and training
- Events
- AoC Annual Conference and Exhibition 2024
- T Level and T Level Foundation Year Events
- Events and training: How we support members
- Network Meetings
- Previous Events and Webinars
- In-House Training
- Senior Leadership Development Programme
- Early Career and Experienced Managers' Programme
- Sponsorship and Exhibition Opportunities
- Funding and finance
-
Policy
- Policy
- Meet the Policy Team
- Policy: How we support members
- Policy Areas
- Policy Briefings
- Submissions
- Policy Papers & Reports
- AoC 2030 Group
- AoC Strategy Groups
-
AoC Reference Groups
- AoC Reference Groups
- 14-16 Reference Group
- 16-18 Reference Group
- Adults (inc. ESOL) Reference Group
- Apprenticeship Reference Group
- EDI Reference Group
- HE Reference Group
- HR Reference Group
- International Reference Group
- Mental Health Reference Group
- SEND Reference Group
- Sustainability & Climate Change Reference Group
- Technology Reference Group
- WorldSkills Reference Group
- Opportunity England
- Research unit
-
News, campaigns and parliament
- News, campaigns and parliament
- Colleges Week 2025
-
Mission accepted
- Mission accepted
- Mission accepted: case studies
- Mission one: kickstart economic growth
- Mission two: make Britain a clean energy superpower
- Mission three: take back our streets
- Mission four: breaking down barriers to opportunity
- Mission five: build an NHS fit for the future
- Mission accepted resources
- General and mayoral election resources
-
Comms advice and resources for colleges
- Comms advice and resources for colleges
- Media relations: 10 ways to build effective relationships with the media
- How to choose a PR agency
- Legal considerations for communications and media work
- How to plan for a new build
- Crisis communications: your go-to guide
- How to handle photo consent for media and marketing
- How to evaluate a PR and media campaign
- How to react to regulation, funding and restructuring issues
- How to react quickly and effectively to the media
- Working with the media: a complete guide
- How to write a compelling case study
- How to write for the web
- Communications, marketing and campaigns community
- AoC Newsroom
- AoC Blogs
- College case studies
- Work in Parliament
- AoC Campaigns
- Briefings
- Communications, media, marketing and research: How we support members
-
Equality, diversity and inclusion
- Equality, diversity and inclusion
- Equality, diversity and inclusion blogs
- AoC’s Equity, Diversity and Inclusion Charter
- AoC’s Equity, Diversity and Inclusion Charter for further education sector organisations
- AoC’s Equity, Diversity and Inclusion Charter signatories
- Diversity in Leadership
- Black FE Leadership Group and AoC partnership agreement
- AoC's Equity Exchange
- Equality, diversity and inclusion: how we support members
- Equality, diversity and inclusion case studies
- ETF Inclusive Leadership Coaching Programme
- Equality, diversity and inclusion briefings
- Home
- Funding finance and pension Briefing 19/10/23
Funding finance and pension Briefing 19/10/23
Teacher pension valuation update. Autumn statement. ESFA allocations
Teacher pension valuation
DfE officials expect to publish the 2020 teacher pension valuation on Friday 20th October. I haven't seen the report but know that it will recommend a significant increase in the employer contribution rate (currently 23.68%) and take it nearer to 30% than 25%. The main cause of the increase is the lower discount rate (reduced from CPI+2.4% to CPI+1.7%, ie a long-term rate of 3.7%) used in the 2020 valuation than the 2016 one but there are lots of moving numbers in what is a complicated process. In 2022, HM Treasury "widened the cost cap corridor" to increase stability (explanations available on request).
The Government Actuary Department (GAD) carries out all unfunded public sector pension scheme simultaneously. The civil service valuation is published (employer contributions up from 27% to 28.7%) but NHS and Police valuations are not yet available.
Public sector pension contribution changes take effect from April 2024 and last three years until 31 March 2027.
Ministers have already confirmed that HM Treasury will be providing compensating funding to "centrally funded employers" to cover the extra costs of these increases and have also confirmed that colleges, like schools, will be covered by an increase in existing funding. DfE consolidated teacher pension funding for schools into the national funding formula a few years ago but has continued to pay a separate Teacher Pension Employer Contribution Grant to colleges. Officials say this will continue. The amount will need to increase from £148 million to nearer £250 million a year and the formula used may mean that some colleges do better and others worse.
There are four main groups of TPS employers:
- state funded schools
- colleges
- private schools who now have the ability to opt out of TPS for new staff while preserving membership for existing staff
- post-1992 universities who are currently stuck in that they don't have an opt-out (unless they employ staff via a subsidiary company) but don't have any funding promise.
As with all budgets, Ministers have made no promise of funding beyond March 2025 because the current spending review period ends then. It feels unlikely that government would create a cliff-edge by cancelling the budget at that point but we have and will keep raising this issue.
The Coalition government overhauled public sector pension rules about ten years ago and included a twenty five year lock in the 2013 legislation which introduced consultation rules up until 2040. This is believed to limit the ability of any current or future government to make changes to the core rules and, having had a Court of Appeal defeat on discrimination (the McCloud judgement), it would take a determined set of ministers to push through changes.
Autumn statement
The chancellor, Jeremy Hunt, will be presenting an autumn statement to Parliament on 22 November 2023 and tax/spending topics continue to attract media attention. Three things to note this week:
- The consumer price index (CPI) rose by 6.7% in the year to September 2023 which creates the baseline for decisions on working-age benefits, state pensions, student loan interest and public sector pension indexation because it is normally the September figures that are used to change rates the following April. There is some pressure from Conservative quarters for the Chancellor to prioritise tax cuts.
- There is analysis on this and lots of other budget information in this week's IFS Green Budget which I think will be a more informed read than the "Growth budget" promised by Liz Truss for November.
- DfE ministers were required to take questions in Parliament about the £370 million spreadsheet error in 2024-5 school funding allocations but are sticking to the line that they will not increase the school budget to provide the previously promised increases
AoC's own contribution to decision-making is an 8,000 word paper which we sent to HM Treasury on 12 October and which we are due to discuss with officials. This:
- explains the economic case for government action on skills.
- documents three of the big challenges faced by colleges (staffing, financial viability, complex and expensive administration).
- lists issues requiring immediate DfE attention (pay, in-year growth funds, maths and English resits, T-levels, Level 3 reform, 2024-5 revenue funding and capital planning)
- sets out a long list of issues for the next spending review.
ESFA publication of 2023-4 allocations
As is normal each October, ESFA have published some very big spreadsheets with 16-18 and non devolved adult skills allocations for 2023-4. This isn't a complete picture of college funding because it does not include devolved, apprenticeships, higher education or capital funding let alone other income. However FE week have already asked about the numbers and UCU are taking a growing interest (albeit with the odd misinterpretation). AoC's Employment Committee recommended that individual colleges are transparent with staff about what funding was allocated earlier this year and what came in September.
Julian Gravatt
PS.
My reminder this week is about the high needs change process which requires local authorities to notify ESFA by 10 November 2023 of provider-level changes for the 2024-5 academic year