Government is planning reforms to school support staff pensions that would make it easier for academy trusts to transfer all workers to the same fund.
At the moment, staff in the local government pension scheme (LGPS) in an academy are automatically part of the fund for their local area, or “administering authority”, run by the council.
In a consultation published this week, the Ministry of Housing, Communities and Local Government (MHCLG) said the current system meant trusts “often have academies spread across multiple administering authorities”.
This “can be inefficient and cause unnecessary administrative costs for employers”.
Trusts can already apply for a “direction” from the communities secretary to switch a school to a different administering authority.
New criteria to be created
The government raised the example of an academy in South Shields whose trust is based in Barnsley.
Its local government pensions would automatically fall under the Tyne and Wear Pension Fund. But the trust can apply to move responsibility to South Yorkshire Pension Authority, which covers Barnsley.
The government is proposing to create new criteria and remove sign off from government on each transfer, with some exceptions.
The current lack of criteria “makes it difficult for employers and administering authorities to know how to construct their case and what the process will be for assessment”.
‘Weigh benefits against risks’
While moving to one council “may bring benefits” to MATs, it should be weighed against “risks of consolidation at the local level, in particular the transfer of assets and member records,” MHCLG said.
The criteria will therefore require MATs to have a “clear and evidenced value-for-money assessment in favour of the consolidation”.
There should also be a “pre-existing relationship with the administering authority that the MAT wishes to join or consolidate into”.
All administering authorities involved “should agree to the change”. And the receiving council “must be able to administer the transfer effectively”.
Sign-off from government won’t usually be needed
The government said it also wanted to “specifically” limit “so-called ‘contribution rate shopping’, where an employer is seen to select the administering authority primarily based on where it can get the lowest contribution rate”.
For situations where all of the criteria are clearly met, the government “proposes to remove the requirement to seek secretary of state consent”.
“The majority of applications received are straightforward and clearly meet all of the criteria above.
“In line with the government’s desire for greater devolution, we believe that secretary of state consent is unnecessary in this situation and administering authorities and employers should be able to take decisions locally.”
The government said this would mean administering authorities and employers “collaborating at the local level”.
But ministers will step in if councils disagree
Ministers also plan to step in if all sides can’t agree on the transfer. Decisions can be reviewed by government, but it expects “this will be very rare”.
When the criteria are not met, the government “proposes that applications to the secretary of state will continue to be required.
“Based on recent applications for directions, this would most likely be situations where the current administering authority does not agree to the transfer.”
The government said it supported applications for directions to consolidate within a single administering authority, “where analysis shows that benefits clearly outweigh the costs in a particular case”.
It also “wishes to avoid that an administering authority can veto otherwise sensible consolidation.
“Whilst government understands that no administering authority wants to lose the active members, it is for government to arbitrate in cases where local agreement cannot be reached.”
UNISON assistant general secretary Jon Richards said: “These are sensible proposals potentially. They should help to reduce admin costs, while simplifying membership arrangements for school support staff and employers.
He said it would be “important for trusts to consult unions locally before they go ahead.
“School support and council staff must retain easy access to a high-quality, defined benefit pension scheme. Many LGPS members are low-paid, and employers are struggling to recruit and retain staff on current wages. High-quality pensions act as a recruitment tool.”
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