FAQs for members in Independent schools proposing to leave the Teachers’ Pension Scheme.
The increase in the employer contribution to the Teachers' Pension Scheme (TPS) in September 2019 has seen a sizeable number of independent sector school employers withdraw from the scheme. Since 2020 Covid-19 has exacerbated the situation.
NEU members in over 60 independent schools have successfully defeated their employer’s proposals to deprive them of the Teachers’ Pension Scheme.
Member success comes from early collective union response backed by the possibility of industrial action. Others have learnt the hard way that action cannot be left until the end of a consultation that can be just a tick-box exercise. Some members have found their loyalty no defense against fire and rehire practices.
If you are in the TPS, with no mention of leaving, it is still useful to be aware of the issues, though no action may yet be required.
5 steps to defend the TPS in the independent sector
Campaign updates 2022
Fire and rehire
There is a growing trend amongst employers to resort to the draconian practice of sacking staff and then re-employing them on worse terms and conditions. This is known as Fire and Rehire.
NEU members have faced this unacceptable threat in many employment scenarios. For members working in the independent sector, the use of ‘fire and rehire’ tactics has become the default position for employers trying to take away their Teachers’ Pension Scheme.
The NEU believe that ‘Fire and rehire’ practice should have no place in employee relations in the 21st century. It is a draconian practice that British Airways had to drop after it was hauled in front of the Transport Select Committee.
Condemnation from political sources include Jacob Rees Mogg: “Fire and rehire tactics shame businesses. Our great capitalist, market economy depends on decency and trust. It is nothing without it”
The NEU supported Barry Gardiner’s private members’ bill seeking to outlaw this pernicious practice. Sadly, the bill did not muster sufficient support to become law. However, it did win the moral argument, moving public and political opinion to oppose this pernicious practice. Prime Minister Boris Johnson said: "Using threats of firing and rehiring is completely unacceptable as a negotiating tactic. We expect companies to treat their employees fairly.” (BBC report October 2021)
Independent schools in the TPS
DoE statistics January 2022
A recent Freedom of Information Request made by the NEU member confirms that the vast majority of independent schools who were in the TPS remain in the TPS.
There are currently 952 independent schools in the TPS. Since September 2019, 274 schools have left. A further 41, including 26 using phased withdrawal, intend to leave. 17 new schools have joined!
You can see a list of all independent schools in each category.
Resources to support your campaign
Model letter for independent teachers seeking meaningful consultation on TPS with governors.
Pension scheme loss
You can download an illustrative comparison of likely loss if members are moved to inferior pensions schemes away from TPS.
Meaningful consultation on the TPS
The NEU believes that meaningful consultation is:
- A clear proposal and business rationale
- An agreed process and timetable
- Adequate time for staff to consider the proposals, not less than 60 days, ideally 90 days
- A robust and independent staff representative body, ideally collective trade union NEU reps
- Full disclosure of all relevant financial and other information, including school finances, pupil numbers, market research, strategic planning, etc.
- Staff having access to the same information as the employer to enable them to ask informed questions, propose informed alternatives and make informed decisions
- Detail of proposed alternative pension individual
- Independent financial advice as to how the proposal affects individual staff
- Genuine consideration of staff proposed alternatives, at the end of the consultation period
Consultation is not meaningful if:
- Decisions have already been made
- Options, such as raising fees, have already been ruled out
- Staff suggestions are summarily dismissed
- Staff alternatives are not genuinely considered
- Conducted under duress, such as being threatened with Fire and rehire
- Employer uses Non-Disclosure Agreements to thwart transparency
- It is a tick box exercise
NEU members have heard a wide range of self-serving, and bogus, employer arguments for why they should agree to surrender the TPS. Some are scaremongering, others downright dishonest.
Here is a list of some common disinformation.
- “Everyone else has left”: simply untrue. It is dishonest and disreputable for an employer to say this to deprive someone of their TPS pension
- “The scheme will collapse within two years”: scurrilous scaremongering
- “They are introducing exit fees”: there are no such plans. Ask to see the evidence: there isn’t any.
- “Employer contribution is increasing further”: Scaremongering, this is unknown. The review of scheme funding is not until 2023. Employer contributions will not change, if at all, until 2024.
- “Coronavirus means that it is no longer affordable”: for a few, this is true; for most, it is not. It is a choice. Ask for full disclosure of relevant information. See the suggestions in the NEU briefing on collective bargaining. Even if the NEU does not have collective representation rights, use the ACAS guidance disclosure of relevant information as a model. Check the public accounts at Charities Commission and Companies House.
- “The McCloud age discrimination case means higher costs for employers”: Misinformation. It could even be the opposite. It is very unlikely that McCloud would lead to an increase in employer contributions. If anything, there is a chance that the impact of McCloud may lower employer contributions if the promised employee benefit improvements from 2016 are not implemented.
- “TPS is vulnerable as it is an entirely an unfunded scheme”: the TPS is a notionally funded scheme, as although there is no designated pot of money, it is state-backed and subject to all the necessary regulatory processes, including periodic valuation. Private schemes are written under either contract or trust. The TPS and other public sector schemes are written under statutory regulations and statute. This makes the claims stronger as the covenant (stemming from the state) is stronger.
- “The proposed alternative scheme offers similar benefits”: this is unlikely in the extreme. By common consent, the types of schemes being proposed will not offer anything like the benefits provided by the TPS.
- “This is not a cost cutting exercise”: a disingenuous argument. If not, for what benefit is it being done? If staff oppose, will the employer withdraw the proposals?
- “TPS is inflexible, and employees will benefit from being able to pay less into an alternative scheme”: a disingenuous argument. It is true that the employee contribution is set. It is true that lower employee contributions might appeal. But the significant reduction in pension is borne by only one person – the teacher. There are some illustrative calculations of the potential loss on the NEU TPS Campaign webpage.
Advice, guidance, and support
Local on-going support: contact your local NEU regional office.
Pension advice: contact the pension team firstname.lastname@example.org
Financial advice: for personal financial advice, NEU members can receive a free, no-obligation initial consultation from Lighthouse, either on a one-to-one basis or at a school NEU members’ meeting. More information: Lighthouse.
Consultation outcome: Teachers' pension scheme on phased withdrawal proposal
The NEU is very disappointed that the Government has agreed to the proposal to allow a so-called “phased withdrawal” from the TPS was announced.
The Government has announced, following consultation, that from Spring 2021, independent sector employers will be able to deny TPS membership to new teachers, while continuing to offer it to existing staff. The current rules require an independent sector employer who elects to join the scheme to offer TPS membership to all eligible teaching staff
This new option will impact on employers’ decisions to leave or remain in the scheme. Some members may think this is a way in which their own pension might be saved. However, the NEU does not believe that this decision is in the general interest of our members in the independent sector, given that moving school may now lead to loss of TPS membership. Nor do we believe that it is for the good of the profession.
The NEU strongly believes that all teachers, regardless of phase, or sector, should enjoy a good pension. The TPS is an integral part of a teacher’s remuneration.
We are concerned that the decision will further undermine the TPS in the independent sector. Some employers will be emboldened to withdraw in the belief that staff opposition will be less in that their own pensions will be protected.
Segregating teachers on such a key term of employment will build walls. It will damage the attractiveness and unity of the teaching profession as a whole; hinder movement between sectors and schools; hamper a school’s ability to recruit and retain quality teachers; and hit younger teachers hard.
In making the decision on how to respond to an proposal from your employer to leave the TPS, we call on members to consider the bigger picture and, wherever possible, robustly resist proposals to leave the scheme, either in one fell swoop or by phased withdrawal.
You can read the full decision here: Teachers' Pension Scheme: independent schools phased withdrawal, consultation response