UK Teachers offered £2,000 to give up generous pensions


Ruby Hinchliffe
Wed, 17 April 2024


Teachers are being offered cash to relinquish generous pensions that private schools are no longer able to afford, a union has claimed.

Employer contributions to the Teachers’ Pension Scheme increased from 23.7pc to 28.7pc, this month. In state schools, teachers’ pensions are funded by taxpayers – and extra funding is issued alongside each rise. But private schools receive no such state funding.

Contribution levels last changed in 2019, when employer rates jumped from 16.5pc to 23.6pc. Pre-2019 changes, 86 schools had left the Teachers’ Pension Scheme. But since 2019, 346 schools have left the scheme according to the Independent Schools’ Bursars Association (IBSA).


Since then independent schools have been attempting to cut costs by limiting pay or persuading teachers to quit the generous pension scheme and move to self-managed pots.

The funding challenge comes as Labour’s plan to impose VAT on school fees threatens to add to the financial burden private schools face.

Around 800 teachers leave the Teachers Pension Scheme each month, according to the National Education Union (NEU).

But now, in some cases, the union said teacher members are being offered “one-off payments” of £2,000 to give up their defined benefit pensions and switch to defined contribution schemes.

David Woodgate, CEO of ISBA, said he was “aware that some schools have offered, or are proposing to offer, additional payments or increased salaries to teaching staff in return for their agreement to proposed contractual pension changes”.

“Those schools in consultation with teaching staff, or preparing to consult, are seeking to identify appropriate ways in which they can balance the financial needs of the school, and the desire to offer teaching staff a flexible and attractive remuneration and benefits package.

“Of course, the approach taken, and specific proposal, will vary from school to school based on the circumstances.”

Niamh Sweeney, deputy general secretary of the NEU, told the Telegraph: “I am really concerned that in a cost-of-living crisis members of the Teachers Pension Scheme will be tempted by a one-off payment to leave.

“Pension contributions are deferred income. We want teaching to be seen as a long-term career and a strong pension scheme should be part of the remuneration for the dedication teachers give to the profession.”

Ms Sweeney, who first spoke to The i, also said: “In many independent schools, NEU members are resisting employer attempts to leave the scheme – with strike action increasingly commonplace.

“The NEU believes that it is irresponsible of employers to seek to entice their staff to leave the Teachers Pension Scheme with the lure of a cash payment now, with some employers offering £2,000.”

Back in January 2020, a year after the last contribution rise, private schools began to offer less competitive pay packages in order to meet steep payments to their employees’ pension pots.

As reported by this newspaper at the time, Taunton School in Somerset came up with a “hybrid” solution , where it kept the old scheme open but gave its 200-plus teachers the option of switching to a new defined contribution scheme.

Krissy Scott, head of education at law firm Harrison Clark Rickerbys, said she was seeing more and more schools operate “hybrid alternatives” to the Teachers Pension Scheme.

She added: “Some schools are asking teachers to accept reduced salaries if they want to remain in the scheme, or to switch to a defined contribution scheme where contributions are lower so the overall cost to the school remains the same.

“Unions are worried. There’s been a lot of strike action as a result of it. But it’s important to note that these defined contributions can still be around 20pc.”

The average employer contribution for men across all industries is around 4.6pc, and for women it is slightly less – 4.4pc – according to financial advice portal Unbiased.

Ms Scott also said in London, teachers’ outgoings are much higher and that they in particular want bigger salaries. She added: “Ultimately to them, what they take home is more important to them right now than what’s going into their pension.”