The National Education Union has urged the chancellor to halt plans to claw back “billions of pounds” from schools when employer contributions to teacher pensions fall. Following a revaluation of the Teachers’ Pension Scheme (TPS), employer contributions will fall from 28.6 per cent to 17.6 per cent from April, though the amount teachers receive on retirement will not be affected. The NEU estimated this would save schools around £3.3 billion a year. But in an update on Friday, the DfE confirmed funding for schools “will be reduced to reflect the decrease to employer contribution rates for the TPS from April 2027”. The move was expected, and follows increases in school funding in previous years to pay for increases in contributions. NEU general secretary Daniel Kebede has today written to John Healey, warning the extra funding is “urgently needed” by schools and imploring him to rethink the decision to recoup it. “The picture for school funding has been bleak,” he wrote in a letter. “The core schools budget is currently £4.5 billion lower than it was in 2010 in real terms. Repeated cuts to school budgets have had devastating impacts on schools. Our class sizes in the UK are among the highest in Europe. School staff are being driven to burnout by relentless stress and sky-high workloads.” He said the planned TPS clawback meant the core schools budget totals outlined during the 2025 spending review “will now be lower in a consistent basis”. “This is likely to significantly affect any planned increases in school funding in coming years. By keeping this money in schools the government can maintain these totals and allow individual schools to enjoy these savings. “This would reassure educators that school funding will increase in real terms in the near future and help mitigate potential job losses, restructures and redundancies as schools continue to struggle with falling rolls.” No LGPS clawback Employer contributions to the Local Government Pension Scheme (LGPS) – which covers school support staff – have also fallen. But unlike the savings for schools on teachers’ pensions, these are not due to be clawed back. Education secretary Lucy Powell confirmed to the NEU last month that this extra headroom would mean schools can now afford this year’s pay rise at a national level. However, the impact will be uneven on the ground due to the complicated nature of the LGPS, and many schools and trusts had already budgeted for the savings. Teacher pay increased by 3.5 per cent in September. Schools were expected to find the first 1 per cent of this from their own budgets. The NEU previously celebrated the decision not to claw back the extra LGPS headroom, hailing it as “significant ground”, and announcing it would no longer be balloting members to strike this autumn. An NEU spokesperson said Powell “set an important precedent” with the decision, adding: “We now want her to follow through and reverse the planned clawback from the TPS which Bridget Phillipson set in train.” But school finance chiefs said there had been no expectation that the LGPS contribution savings would be clawed back. “Additional costs or savings (regarding LGPS) have historically been for schools to bear or benefit,” said Fiona Green, strategic finance lead at St Mary’s CE Primary School in Tunstall, Stoke on Trent. Another finance lead said schools and academies “did not receive extra money from the DfE…when employers’ LGPS contribution rates increased so why would the DfE feel justified in clawing back the equivalent cash when the rate (temporarily) drops?” The Treasury has been approached.