A review launched into academy pension deficits will recommend ways to address the enormous funding gap in the Local Government Pension Scheme (LGPS).
Schools Week revealed last week that poor investment returns on pensions for support staff have left many multi-academy trusts with deficits amounting to tens of millions of pounds.
Now accountancy company PricewaterhouseCoopers plans to speak to trust chiefs, teachers and unions before drawing up “five or six recommendations” that will be presented to the LGPS’ advisory board members by March next year.
Jeff Houston, head of pensions at the Local Government Association, said the review would address questions over whether the government would underwrite pension liabilities if trusts collapsed or academies closed.
He said previous correspondence with Whitehall suggested any pledge was more of an “elastic guarantee” and that the review could push for ministers to offer a more “cast-iron” pledge.
Local authority-maintained schools were not included as councils had the capacity to raise taxes to meet shortfalls, while academies were reliant on central government cash.
The review was launched in August following government proposals announced in March to academise all schools.
Jon Richards (pictured), head of education at Unison, said any recommendation to outsource staff pensions to private companies, as AET tried to do with PwC in 2014 before being blocked by government, would be opposed by unions.
The DfE said in 2013 it expected outstanding LGPS liabilities to be met from academy trust’s assets if an academy closed. The DfE guaranteed that any outstanding deficit would be met by the DfE. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/248678/131003AcademiesFAQ3.pdf
Whether this guarantee is ‘elastic’ or ‘cast iron’ might depend on how large LGPS shortfalls become.
Michael Gove undertook a consultation on this very issue in late Autumn 2013. On behalf of our school I contributed to this consultation in November 2013. We have never, to my knowledge seen the outcomes, if any, which came out of this consultation. In 2011/12 Michael Gove said that no academies should be adversely affected as a result of becoming an academy. Indeed the Priory School, in Suffolk, successfully petitioned to be pooled back in to their local authority’s scheme, unfortunately our LA would not allow us to do so despite the legal challenge won by the Priory School. I fear this, on top of the other huge employer increases will force us into a fatal financial situation