D&E To Inject £940m Funding For  College Cost Pensions Increase

D&E To Inject £940m Funding For College Cost Pensions Increase

By Gavin Mackintosh-

The Department of Education in  the Uk has pledged to provide extra money to prevent schools from losing out in the first year  they have to pay higher contributions to teachers’ pensions.The announcement followed a consultation launched in January, following a request for feedback on its proposals to support certain education institutions with the increase to pension scheme in 2019/20.

The DfE had previously scheduled its planned response for last month, March 2019, but today confirmed it will fully-fund the increased costs of the scheme for “state-funded schools and colleges, as well as other publicly-funded training providers”, which will cost a total of £940 million.

The Teachers’ Pension Scheme is one of only eight guaranteed by the Government; provides additional benefits linked to salary; is inflation-proof to offer teachers a secure retirement; and offers the typical teacher around £7,000 in employer contributions every year.


Education Secretary Damian Hinds said the “scheme is, quite rightly, one of the most generous pension schemes in the country” and is aimed at ensuring “schools and colleges can focus their resources on providing the best education”.

In 2018,  the amount colleges and other public-funded FE training providers must contribute to staff pensions was set to rise from the current rate of 16.48 per cent to 23.6 per cent – an extra £142 million a year – from September 2019. However, the late application of the increase in the financial year means es colleges would have to pay an estimated £80 million extra in 2019/20. This will rise to the full amount of £142 million in 2020/21.

Today, the DfE  said that the money for schools will be allocated on a per-pupil basis, and that it will create a new supplementary fund to help schools that are still struggling after that. The implication of this is that schools which have a shortfall of more than 0.05 per cent of their grant relative to their actual costs will not be left in financial difficulty.

Julian Gravatt, deputy chief executive of the Association of Colleges, said it welcomed the government’s decision to “ensure that the increase does not destabilise the sector”.

He added: “We will be pressing government in the spending review to not only maintain this budget but to ensure that colleges have the resources they need to provide high quality teaching and training to young people, adults and employers.”

Last September, the Department Of Education said that schools will see the amount that they have to pay into the Teachers’ Pension Scheme rise from 16.48 per cent now to 23.6 per cent in September 2019.The DfE had on that occasion pledged £830 million  to cover the extra cost of the increase for state-funded schools until at least April 2020, and £80 million to cover FE colleges and other public-funded training organisations.

It declined to cover the costs of independent schools, sparking fears for the future of many prep schools.Today, the DfE  said that the money for schools will be allocated on a per-pupil basis, and that the DfE will create a new supplementary fund to help schools that are still struggling after that. The implication of this is that any school which has a shortfall of more than 0.05 per cent of their grant, compared to their actual costs, will not be left in financial difficulty.


This supplementary fund in addition to some extra costs for FE institutions will increase the total cost to the DfE from £910 million to £940 million. Under the arrangements, funding for FE institutions will be based on actual costs. The consultation response does not say whether the government will fund the increased costs for schools beyond 2019-2020.

Speaking during the consultation period, Geoff Barton, general secretary of the Association of School and College Leaders (ASCL), said he would be seeking assurances that funding would cover the cost of the increased contribution rate “in full” not just for next year but for future years.

He said: “Schools and colleges are very concerned about the potential impact of this. They cannot afford yet another unfunded cost on budgets which are already under severe pressure.”

And Julia Harnden, the association’s funding specialist, said the uncertainty about funding after the first year was “jeopardising” schools’ ability to plan budgets. There are no plans to extend the financial support to Uk Universities which could also do with extra support, but were  left out of considerations for increased funding. Instead, the consultation calculated the additional costs to English higher education institutions of increased Teachers’ Pension Scheme contributions from between September 2019 and March 2020 to be £80 million

Alistair Jarvis, Chief Executive of Universities UK said

“We are disappointed that government has decided not to provide any additional funding to universities in England to offset the costs of unplanned increases in employer contributions to the Teachers’ Pension Scheme.

“This is effectively a stealth tax to boost the Treasury’s coffers. It represents annual costs increases of an estimated £142 million for around 70 post-92 universities across the UK from this September.

“Ultimately, this will have to be paid for by diverting funding from other priorities. Today’s announcement in England is bad news for university students, staff and communities that benefit from universities.”

“In England, these significant increases in pensions costs come ahead of the imminent publication of funding review recommendations. It is imperative that this review does not lead to further cuts that would lessen the positive impact of universities on the economy and society.



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