Withdrawing from TPS?

[savagebaggagemaster]

Has anyone else's school decided it's doing this? The government's decision to increase employer pension contributions to the Teacher Pension Scheme by 43% has put a lot of schools in a very difficult situation whereby they can't afford to pay their employer contribution. Has your school decided to opt out? State maintained schools have been given a reprieve of a year to sort this out, but independent schools haven't been. This will also affect academies. Has anyone else been affected by this?

Yes that would make sense. Starting to wonder if it's better to take the money and run! Eg put it into my own savings account. Methinks I need a financial adviser...

Financial advice is a good one. However the TPS is a good pension, a very good pension. I'm pretty sure the pensions expert at work said that 3rd/3rd/3rd thing is a myth.

You won't lose any money you've put in. You can also rejoin if you go to a school that does TPS. You actually can't just take the money out, you can transfer to another scheme according to their rules. But after the first year you can't get the money as such until you retire.

I left teaching so mine is just sitting there waiting for me to retire. Remember a pension is not a savings account. It's not about how much you or employer pay in, as such. It is calculated on the number of years service and your final/average salary over that time. It is a formula. So if your statement says £5k that doesn't mean that's all you'll get.

I am very worried about this too and agree it is a huge change which has been very low profile. It will have a massive effect on teachers' pensions.

It is strange that the huge cost is being added in one go and all on the employer contributions. I think it will certainly cause some private schools to close and it is difficult to imagine how state schools will cope after the extra funding promised stops after a year.

If you leave TPS, your final salary will be calculated at that date (this is not necessarily your current salary). It will be indexed but not as favourably as if you stay in the scheme and of course, for most people, it will be much less than the "final salary" at the end of a career. The career average salary is indexed at CPI instead of CPI+1.6% which is used if you stay in the scheme.

From my reading around this, it looks like state schools will be given ‘additional funding’ to offset these additional costs for the first year - September 2019 to August 2020. I’m guessing this includes academies and free schools.

I remember back in 2010 or 2011 when Michael Gove was Education minister and the initial changes to TPS were brought in, one of the initial proposals was to prevent private schools from having access to TPS. I guess this is the result of this.

In the long term, I don’t think private school employees will be able to rely on having access to a defined benefit pension in much the same way that other private sector employees cannot.

Private school staff will have exactly the same choice that millions of other workers have had when their final salary pensions were axed - accept the new (less generous) scheme or find a job elsewhere. Employers will have to find other means of retaining the best staff

Thanks for all the insightful and helpful info. It may well be that independent schools can't afford to stay in the TPS;however, if they all withdraw and leave a £850 million gap in the scheme, then there won't be enough money to pay retiring teachers pensions, hence why they didn't make private schools withdraw in 2011.

There isn’t a pot of money kept for teacher pensions. They are just paid out of general government spending.

From what I gather. I’m not an expert!

@savagebaggagemaster
That's not how it works at all. Private schools withdrawing from the scheme will have no effect on the pensions being paid out.
I think the TPS is a fantastic scheme and it'll cause some real recruitment and retention problems for schools that don't offer it. They'll have to offer an alternative as well and it could become very complex for teachers moving around career wise who'll be losing significant yearly accrued service etc. This is a bad move. I'd say it's a warning not to teach in a private school.

Although I am not an expert, I do know how it works. Yes, there isn't a pot of money as such; however, the government will no longer be able to rely on the money from schools which withdraw from the scheme to help fund the current pensioners, because it is clear that there isn't enough money as it is. As for saying it's a warning not to teach in a private school - this increase will affect all schools - no one should be complacent; it's a good idea to find out your school's position on this, especially if it's an academy.

In other words, the lack of money coming in to the TPS, means that there will be cuts elsewhere so the government can keep paying out. It's not good news for anyone.

But long term there will be fewer teacher pensions to pay if the private school teachers are not included.

That's very long term indeed as those who have paid into it will be entitled to it when they retire; even if they stopped half way through their career.

Sorry but you patently don't understand. The TPS is a completely unfunded scheme, meaning annual benefit payments are paid direct from government contingency funds.
I don't think it's good news either for anyone but if teachers vote with their feet and don't work in private schools because of it then they'll have no choice but to offer it.

No need to be sorry. Please explain what you mean by 'completely unfunded'? I'm just wondering what and who we've all been paying for all those years?

Our pension payments just go into general government income and pensions just come out of general government spending. It’s a promise to pay. There is no investment pot, no pension fund.

I don’t really think private school teachers should be part of a public sector pension scheme.

Yumyum, why not? If the private school teachers are paying in, then why shouldn't they be a part of it?

I don’t think any private sector employees should be able to access any public sector pension schemes.

If the private school teachers are paying in, then why shouldn't they be a part of it?

I don’t think you’re listening. The current employer/employee contributions will not cover the projected future pensions liabilities of those teachers. The pensions are paid out through taxation and make up a huge proportion of the welfare budget annually (as is the case for all public sector pensions). In other words, the taxpayer pays the ‘difference’ between what the employer and employee pay in and the pensions of the retirees.

Why should the taxpayer fund generous public sector pensions for private sector employees? Should the highly paid sports physios at premiership football clubs be able to access NHS pensions? Should bodyguards employed by oligarchs be able to claim police pensions? The answer, for most people, would be no. Why should it be any different for private school teachers?

You have every right to feel pissed off about the changes - as did the millions of private sector employees who lost their final salary pensions in the 1990s. However, you have to accept the fact that if your employer wants to buy into a pension service, then they will have to start paying the full cost of it.

I am listening, but I think you've missed my point. I had to laugh at your comparison of private school teachers to highly paid anyone. FWIW in general, private school teachers are paid much less, in many cases, than their state counterparts. Have you ever worked in one? Given the fact that the private schools' pupils' parents pay all of those very taxes, yet don't take up the state school places, it would not be a good situation for anyone if private schools were to close as a result of this. Where would all those children go? And why all the vitriol towards private school teachers? Academies are essentially the same; drawing from the teachers' pensions but run as a business whereby the head of the trust pays him/herself a generous salary. And what about free schools? Should those teachers not be allowed to be in TPS either? At the end of the day we need teachers to teach kids in all of these establishments and the disintegration of the TPS won't help any teacher in the long run. It may be private schools now, but next year it'll be state schools.

"Academies are essentially the same" Don't be ridiculous. Academies and free schools are subject to the admissions code and parents do not pay. Simple as that.
As for not being sorry, it's that type of unnecessary sarcasm that prevents me explaining The TPS further. As well as providing you with advice you may find useful.

Private schools are not the same as maintained schools be they LA control, academies or free schools. Nope. The level of funding is not the same. I stick by my statement that no private sector employees should be able to benefit from public sector pension schemes. Conversely, I do not get to benefit from the staff discount on fees for my own children in the way private school teachers so often do.

I would also do away with tax breaks for private schools but that’s another thread!

BTW I was privately educated and will likely privately educate my children at secondary level so this is not about me being against private schools!

I stand by my statement that it will ultimately affect all schools. I'll bow out now. Thank you to those who tried to be helpful.

Hi, I work in an independent school and we have just been informed that the board have voted to withdraw from TPS from September. There is now a 30 day consultation period but I don't feel that means much when the decision has been made. They have booked an IFA for us to see over half term and will continue paying the 16.49% either into a pension or into salary. Not happy really....

I hope nobody minds me resurrecting this thread. We have recently been told that the school will be withdrawing from TPS. I feel sick and haven’t been able to sleep. I have worked part time for most of my career so my pension is already poor - the though that it will be further diminished is so worrying. @bea74cat I was wondering what happened at your school and what you have been offered instead. Would also love to hear any other experiences.

It's either change pension schemes or close schools due to affordability. Bring in all the unions you like... How the school's are going through magic up money, when most are struggling already... I don't know?