Working in a non-TPS independent school

[Dreambee]

Anyone work at a school that no longer offers the teacher's pension scheme? Are the alternatives being offered anywhere close?

I have seen a number of schools that are appealing on paper but are no longer in the TPS. To be honest, I think UK teachers are already underpaid considering our level of professionalism, so not having the generous TPS employer contributions is off-putting.

Also does leaving TPS suggest the school is in a financially precarious position?

The alternative pensions offered are far far worse.
They are defined contribution instead of defined benefit. Often, the amounts paid in by the school are decent (and they will emphasise that) but that isn't the key comparison to make. The outcome or benefit isn't defined but determined by the stock market and how the pension fund schemes invest.

A teacher earning £29k over a 40 year career will accrue a pension of about £20k at state retirement age (very rough figures) and this might cost them under £100k in teacher contributions. This will be an index linked so inflation proofed pension and include death in service benefits.

To get a defined contribution pension pot that would pay out £20k, you need a pension pot in excess of £1m to have an annuity which pays an inflation proofed pension for life. Your pension pot will be worth nowhere near this level if you work 40 years and make excellent contributions.

Avoid schools without the TPS. They usually pulled out because they couldn't afford it and so are small or less secure financially. They often pay less as well. It's bad enough if you're inna school which pulls out, but absolutely don't choose to go and work in one.

These schools which are already often small and financially struggling,mill now also struggle to recruit top quality staff because of their lack of TPS.

The majority by far remain in it. A judgement in November allowed those considering pulling out to remain in for existing staff and opt out for new staff from later this summer. Many who were considering pulling out will now think again with this in mind. Over time, more might opt out,mesppecialybif costs for employers continue to rise, but it a SERIOUS loss to teachers, so look at the larger schools and the successful ones, unless you just know that your profile as a teacher won't appeal to them.

Honestly, these schools without TPS at this stage of the game are very much second rate employers and will struggle to recruit unless thry Y find peopl,e who have no clue about pensions or their importance.

You're absolutley right to ask about this and hopefully this thread will help others considering it too.

Most of the prep schools in my area have come out of it, and I know of two fairly big name senior schools that are in consultation about it now. I don’t think it means they’re are in a financially precarious position - it’s just a HUGE saving not to be in it. It’s definitely worth checking pupil numbers and the school accounts though as it could be a sign that things aren’t rosy. Apart from the over subscribed London schools and a few others, most independents are going to have to consider cost saving in the next few years if they haven’t already.

@WombatChocolate recruitment isn’t an issue in my area - lots of good quality applicants, many from the state sector desperate to leave.

Thank you for your response. It's a stark warning and what I unfortunately suspected.

[quote mumtoboyscanterbury]@WombatChocolate recruitment isn’t an issue in my area - lots of good quality applicants, many from the state sector desperate to leave.[/quote]
I wonder if some of those applicants are simply unaware or complacent about the fact that their pension is at risk. I'd say that the majority of larger preps in my area are still in. Losing a good pension by choice is just not worth it imho. Who knows what old age will bring?

I’d imagine it’s mostly younger teachers who are willing to sacrifice the TPS. They often aren’t as interested in pensions (not surprisingly) and they, along with lots of teachers actually, don’t grasp just what a benefit the TPS is and what a loss it is to work in a school without it.

Preps, being smaller than senior schools will generally struggle more with extra costs such as the employer contribution rising in TPS. Outside of London and the southeast, demand for independent education is far lower, and in many areas, lots of Preps have closed down or are merging, because quite simply there are too many for them all to operate at optimum size and be efficient. It’s going to be an ongoing trend and tends to bite even more in recession, and given Covid, the next few years will be hard for a number of independent schools where applications per place aren’t as high.

I think that over time, there really will become a 2 tier system of schools from the point of view of teachers. There will be those in the TPS and those that aren’t. It is true that staff recruitment to some degree is a localised thing, because lots of older staff might not be keen to significantly relocate their lives, but younger staff and some older staff will always move for work and the TPS honestly is such a superior pension. Teaching isn’t the best paid occupation and the pension has always been an absolutely key part of the benefits package. People could easily retire on a quarter of what they would have had, by not being in it but in a defined contribution scheme instead. It will have a massive impact on people’s retirements.

Perhaps this will be a further thing that drives this polarisation of schools in the independent sector. Various things are forcing school closures and mergers in some areas. These additional costs are one, plus recruitment issues will come into play in some too. It will take a while to emerge, but if staff leave schools that exit the TPS, and schools find the most qualified and best teachers (not always the same thing I know) expect the TPS, schools without it are missing something. Round here, when parents visit schools, they often ask if the school is still part if the TPS. They are a knowledgeable group and want to know that the school has got staff stability and ability to recruit into the future. Various parenting sites, where people discuss choosing schools, have this mentioned as a question to ask, in order to make comparisons between schools.

It’s a hard one. Schools have to balance their budgets and the increase in pension costs was 40%. That said, the share of overall costs of teacher pensions in the costs of running a school are of course far lower, and schools do have choices about where to make cost savings.

The bigger affiliations of schools such as HMC for senior schools, all tend to keep a close eye on what each other are doing. Not all those schools are big or successful or in the south east, but lots are. No-one wants to be the first to exit and take on a disadvantage. However, if lots of big names did it together, others probably would too. But for now, those costs are actually affordable for most larger schools and so they will keep going with it and as a way to ensure a longer term advantage in the market.

I would advise anyone considering taking a job in a non TPS school to research the impact of the different pensions on retirement income really carefully. I gave some figures upthread to illustrate the pension pot required to deliver what the TPS does. Most people who work a career in job with a defined contribution pot struggle to build a pot over their working life of £250,000. The average is actually only about £60,000. £250,000 would give an annual pension of less than £5k. Yes, there will be the state pension too, but £5k, compared to the £20k pension lots of teachers can reach without having significant management responsibilities is a vast difference.

When there’s a choice of where to work ....and bearing in mind most independents (over 85%) remain in the TPS, there just is just no need to take a job in one that doesn’t offer it. Maybe later that won’t be the case, it’s hard to know what the longer term picture will be, but for now it’s not something that HAS to be sacrificed in order to work in the independent sector, so why would you really, when it honestly is a MASSIVE big deal. I really think lots of teachers will look back on some of their choices with regret and say ‘if I’d only known the full implications I would have made different choices’.

Sorry for the rather zealous post. I feel really strongly about this because too many people haven’t looked into it enough and can find themselves in situations which will make a vast vast impact on their retirement.

If you work in a school that does this, and you cannot leave for various reasons, that’s one thing. However, if you are applying for jobs, to go for a non TPS school just seems madness, or significant lack of knowledge to me at the moment.

I do agree with you @WombatChocolate but unfortunately I think it’s almost inevitable for many schools. Also, even if the majority of schools are in the TPS now, I recently read an article about how many have entered consultation about it in the last year and I think many more will be leaving soon. (I’ll try to find it!) As you say, it’s the small preps that are struggling. A few have closed near me too. My school is still in it for now.

Some will go for the new option which is to close it to new staff joining the school and keep it for existing staff. That’s a tricky option as it will feel unfair, although people will know when they join what they are signing up for.

This option will be enough to keep some of the marginal schools in and they can review and always go for a full-scale leaving at a later point.

I agree it’s hard to know longer term what the landscape will look like. Some people think this is also the government paving the way to making the pension optional for state schools too and that they want to pick schools off gradually as they know it would be politically charged to attack the whole school sector at once.

Lots of teachers aren’t in the unions anymore and this especially applies in independent schools, so lots of teachers when faced with this from their schools, don’t know enough about the implications or about how to respond to it. Some school staff have been successful in challenging the idea when there has been consultation and the school has changed their mind or not proceeded. For those who really are hard up financially, there probably is no option but to pull out. But I’d question whether those are good schools to apply to work in anyway to be honest, in terms of resourcing and the longer term.

I think the whole private sector is polarising and will look very different in 10-15 years time. There will be some big and successful schools and far far fewer small and middling type schools.

I worked in a private school a couple of years ago that didn't pay into TPS even before the hike in contributions. It was a small school and the pay wasn't great either. They contributed to a L&G workplace pension scheme and it was alright, but not a patch on TPS. I continued to make my own contributions to this pension scheme after a while because I am I working overseas for a short period and it's better than nothing. But it will generate very little in my retirement. In September I am going back to a TPS school and I don't ever plan to work for a school that doesn't contribute again for as long as I continue teaching - it's left an unfortunate hole in what is other a very good TPS.
Unless you are absolutely in love with the idea of working at a non TPS school, I think it's a big benefit to give up these days.

This summer I left a school that I really liked and one of the main reasons was that my old school is probably leaving TPS next year. There is no guarantee that my new school will stay in TPS, but I think it is very likely that it will and the school is much more secure financially.

I was interested to see that the option to close the scheme for new employees is now available. I feel guilty to say that I was relieved to see this, as I think that option is likely to replace leaving TPS for many schools. But it does undermine and devalue the profession.

I have noticed that many teachers, especially younger ones, do not realize the value of TPS. I know some who considered opting out just to avoid paying contributions - needless to say I counselled against this. However when you cannot afford a mortgage and your retirement age is about 70, I can understand why people will make this choice.

We are on a warning/consultation to come out of TPS in September 2022, I know of several teachers who will leave because of it. I don't think that younger staff actually understand the benefit and I fear that it will create a tiered system within the profession.

There will be differences between the schools that do opt-out with the 'wealthier' schools offering a better pension deal compared to others.

Also, I worry about the TPS and the way it is funded if too many indies come out. The TPS is due a revaluation I think in 2022 or 2023 when contributions may change yet again.

One of the reasons the gov has offered independent schools the chance to stay in for existing staff but opt out for new staff, is to slow the pace of leaving. They have been worried if too many leave fast, their incoming funding from current workers will drop and be a problem. They essentially do want schools to withdraw becausse the contributions don’t cover the costs of the scheme, but gradually.

They do say, that a big upward increase in employer contributions probably wouldn’t be needed because low inflation has meant pension increases have been less than predicted. However, the pension scheme will have to fund the costs of implementing the McCloud decision and how that will be paid for isn’t clear yet...probably will mean increased contributions from either/or both employees and employers in future. That is more likely to hit younger teachers over time.

It is all a bit crap and the future isn’t looking promising in the longer term. All people can do I think, is try to work in schools that are most likely to stay in it for as long as possible and accrue the most years in the TPS as they can.

There might come a point when most independents have withdrawn but probably not for a while. At that point, people will need to choose if to leave the sector to get the pension in a state school or accept the lesser benefits. It will be a hard one and not everyone can suddenly get a job in a state school. Some people might decide now is the time to make that move, others might make it later, some will decide to do it too late, when loads of people are shifting and it’s more difficult, but some will also decide they just don’t want to work in the state sector and will accept a pension of a quarter of the value of what they could have had as a consequence. Independent school staff can’t really win in any of this,sadly.