To exit the Teachers’ Pension Scheme (TPS) across 6 schools and replace with a different pension scheme offering, thereby containing costs, but offering a competitive alternative solution.
What was the context:
The government introduced an increase in the school employer contribution to the TPS from 16.4 % to 23.68% for September 2019. This would be a significant increase on the payroll bill in the first year, with a consistent ‘on cost’ for every follow-on year. This was against a backdrop of falling pupil numbers and likely additional pressure on expenses.
What were the options:
Accepting the increase was not an option, being in the independent sector we could offer alternatives if we consulted appropriately. We sought Education Sector guidance form the ISBA and decided to opt for another type of Scheme and so embarked on a consultation with 300 Staff.
What did we do:
We communicated our ideas and rationale and followed the formal consultation process by electing representatives and holding group and individual consultation meetings.
We engaged pension advice to explain the pros and cons of the new scheme that we wanted to introduce, defined contribution as opposed to defined benefit.
We offered an incentive to staff that agreed to a contractual variation of terms in the first year. This was still lower that the cost of the planned government increase.
What was the outcome:
We achieved the change after 6 months on contract variations with no employment disputes. The percentage cost of pension were fixed for future years.
What did the client say:
They were delighted with the result, not least because of the financial cost containment, and that there had been no employment risks, but because we had tackled a very emotive issue in a fair and transparent way in keeping with the values of the organisation. We also consulted on life cover and critical illness cover at the same time and changed providers.
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