DfE confirms it will 'fully fund' £830m teacher pension contributions rise next year

The government has confirmed it will “fully fund” the estimated £830 million cost of rising pensions contributions for schools next year.

In a response to its own consultation on changes to the teacher pension scheme that will see schools’ contributions to the teachers’ pension scheme rocket by more than 40 per cent, the Department for Education confirmed today that money will be provided to cover the rise in full in 2019-20.

However, the amount of funding available for future years remains uncertain, and will be governed by the next spending review.

School budgets for September will increase to reflect the increased pension costs, with increases calculated on a per-pupil basis. The DfE has also confirmed today that any schools experiencing a shortfall of more than 0.05 per cent in their grant compared with the actual costs of the pension increase will be able to receive additional money from a “supplementary fund”.

Damian Hinds, education secretary, said the scheme is “one of the most generous pension schemes in the country” and the government plans to cover the increased costs next year “so state-funded schools and colleges can focus their resources on providing the best education.”

Julia Harnden, funding specialist at the Association of School and College Leaders, said the government announcement was “welcome” but raised concerns about the uncertainty of what funding will be available after 2019-20.

“Schools and colleges are currently unable to accurately plan their long-term budgets, not only in terms of how the teachers’ pension scheme will be funded, but over their income and costs in general. This uncertainty needs to be settled sooner rather than later,” she said.

“At a time of huge financial pressures, budget planning based on assumptions alone is yet another intolerable strain. Schools and colleges need improved funding and they need it now.”

As well state funded mainstream schools, the plans cover non-maintained special schools, independent special schools that teach children with education, health and care plans, local authority centrally employed teachers and music education hubs.

However, the government has not proposed to cover the costs of the pension rise for private schools – estimated at £110 million – or in the higher education sector.

Public sector pension schemes are re-evaluated every four years by the Treasury. The government said it will “determine the appropriate allocation mechanism” for distributing
funding to state-funded schools and FE and announce this in due course.