HE employers left to cover TPS contribution increase

As a direct result of decisions made by the UK government the rate of employer contributions to the Teachers Pensions Schemes is increasing by between 3% and 5% (see chart below). It was confirmed in the Autumn Statement that, with the economic outlook having worsened, employers will have to foot bigger bills through changes to the discount rate (known as the SCAPE rate) used by the UK Government for all public sector pension schemes. The new rates will come into force in April 2024.

It is important to understand that this increase is due only to UK government policy and not because of any increase in the scheme's benefits.

When the valuation result was published on the TPS website, additional funding to cover the costs of the increase for centrally funded organisations for England, schools and colleges, was confirmed. The Department for Education undertook to provide additional funding to cover the increase in the employer contribution rate for directly funded scheme employers for the financial year 2024/25. This includes mainstream schools, high needs settings, post 16 and further education settings, and eligible early years providers. Subsequent costs will be looked in future years as part of subsequent spending review rounds. Devolved nations should see a rise in Barnett consequentials corresponding to the costs UK government is covering in schools and colleges in England. 

Crucially, however, this does not include HE providers. The DfE's position is that 'HE providers are autonomous bodies, and the UK government doesn't fund the costs of changes to the Scheme for them in the same way as for schools and colleges.' The UK government says that it 'will continue to work with the HE sector to explore how it can best support those providers affected, including planning effectively for implementation of these changes.' 

UCU will continue to campaign for additional funding to cover the costs faced by HE as well as FE institutions. These increased costs are unfair and artificial. The pension scheme is a notional fund, and the contributions paid (both member and employer contributions) go straight to the HM Treasury. The UK government's refusal to fund this increase means that a substantial amount of money that could otherwise be used for the benefit of the students, staff, and their communities is being taken out of the sector.

For the benefit of British higher education and all who work in it, the government must urgently rethink its position on funding.