- About us
- About colleges
-
Corporate services
- Corporate services
- Mental health and wellbeing
- 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
- Employment Briefings Library
- 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
-
Projects
- Projects
- Get Involved!
- Projects: How we support members
- Resources
- The 5Rs Approach to GCSE Maths Resits
- Apprenticeship Workforce Development (AWD) Programme
- Creating a Greener London – Sustainable Construction Skills
- Erasmus+ EXPECT Project
- Digital Roles Across Non-digital Industries
- T Level and T Level Foundation Year Provider Support Programme
- The Valuing Enrichment Project
- Higher and Extended Project Qualifications
- OfS - Higher Education Social Prescribing Project
- Pears Foundation Youth Social Action Programme: Phase 2
- T Level Professional Development (TLPD) Offer
- T Level Curriculum Macro-Sequencing
- Contact the Projects Team
- DfE Multiply Capability Support Programme
- Creative Arts in FE 2024 – developing student voice through creativity
- Resources/Guidance
- Sustainability & Climate Action Hub
- Partnerships
- Honours Nomination
- Brexit
- Recruitment and consultancy
-
Events and training
- Events and training
- Events
- T Level & T Level Foundation Year Events
- Events and training: How we support members
- Network Meetings
- Annual Conference & Exhibition 2023 Resources
- Previous Events & Webinars
- In-House Training
- Senior Leadership Development Programme
- Introducing AoC's Early Career and Experienced Middle Managers Programme
- Sponsorship & 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 Strategy Groups
-
AoC Reference Groups
- AoC Reference Groups
- Adults (inc. ESOL) Reference Group
- Apprenticeship Reference Group
- Technology Reference Group
- HE Reference Group
- 14-16 Reference Group
- Mental Health Reference Group
- 16-18 Reference Group
- SEND Reference Group
- WorldSkills Reference Group
- HR Reference Group
- Sustainability & Climate Change Reference Group
- EDI Reference Group
- Opportunity England
- Research unit
-
News, campaigns and parliament
- News, campaigns and parliament
- General and mayoral election resources
- Comms advice and resources for colleges
- AoC Newsroom
- AoC Blogs
- Work in Parliament
- AoC Campaigns
- Briefings
- Contact the Communications, Media, Marketing and Research Team
- 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
- 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
- Home
- News, campaigns and parliament
- AoC Blogs
- Is there a teacher pension timebomb in DfE's budget?
Is there a teacher pension timebomb in DfE's budget?
As pension schemes go, the Teachers’ Pension Scheme (TPS) is one of the biggest in the country. One in every 30 people in England is either a member of the scheme, a pensioner or deferred (someone who isn’t a teacher anymore but will get a pension when they retire). The TPS pays more than £10 billion a year to retired teachers and collects in £6.3 billion in contributions from teachers and their employers. It’s these contributions that are potentially a small financial time bomb. The money that employers – colleges, schools and post-1992 universities – pay into TPS rose in 2015. Contributions may rise again in 2019.Or they might not.We don’t actually know.We’ve reached the longest day of the year and we’re waiting for the government actuary and the HM Treasury to finish their longish valuation of the teachers' scheme which started last summer and which is due to finish sometime soon. When it does, we’ll find out what the actuary thinks about the state of TPS and whether there need to be changes to the 16.48% employer contribution.This process doesn’t get a lot of attention in education but it’s important. Contributions rose to 16.48% in September 2015, which added 1% to the total costs of a typical college (or school). This is a problem for colleges because budgets are on a knife-edge as a result of years of funding pressure.
There are published rules about how much institutions and staff pay via a carefully defined valuation process. The Government Actuary Department values all public sector schemes every four years on the basis of instructions (directions) from Treasury. There is more on the issue here. The 2014 valuation reported a 92% funding level and recommended an increase in what employers pay from 14.1% to 16.4% (on top of which DfE added a 0.07% levy). Contributions into TPS are on a rising trend. 20 years ago staff paid 6% and institutions 7%. Staff contributions now average 9.6% while the employer rate is heading inexorably up.We really don’t know what the actuary will say this time about TPS but there’s a new reason for concern. This weekend’s NHS funding settlement involves Treasury giving £1.25 billion to the NHS to pay for higher pension contributions. We know the NHS is under pressure and we know that the NHS pension scheme – valued like the TPS – was also in deficit in the last valuation (a 96% funding level). If the government actuary has decided NHS contributions need to rise, then it’s likely s/he will be coming to the same view on the TPS. The figures in the NHS imply an increase from the current level of 14.3% to something like 17% but this is my guess. We won’t know until the relevant officials share what they know.It really isn’t acceptable that this is all so late. TPS employer contributions may change in 2019 or they might not. Every percentage point works out at about £250 million across the education system (school, college and post-92 university budgets). If TPS rates go up 2%, that’s half a billion pounds. The Chancellor says there’s no more money. His officials may have defused this paritcular TPS timebomb. Or perhaps they haven’t.