The amount of school pension contributions being made from next year will rocket by 40% , which could see school budgets being stretched even further.
The Department for Education has contacted headteachers to say that the pension contributions from their schools for teacher pensions will rise to 23.6% from next September.
Currently, employers contribute 16.48% of a teacher’s pension.
The move follows evaluation by the Treasury of all public service pension schemes.
Extra funding to meet additional pension costs
However, the Department for Education has said previously that it will provide the extra funding that schools will need to meet their additional pension costs.
The big worry for headteachers is that this guarantee of extra money is after next year’s planned Spending Review and may not come in time for next year’s school budget planning.
The general secretary of the Association of School and College Leaders (ASCL), Geoff Barton, said schools are very concerned about the contributions and the potential impact on budgets.
He added: “Schools cannot afford unfunded costs on their budgets which are under pressure already.
“We are reassured by the government’s intent for providing additional funding to colleges and schools in 2019/24 for this extra cost but we will be seeking assurances that the funding will cover the cost of the increased pension contribution rate in full.”
Schools and colleges across England are facing budget uncertainty
He added that schools and colleges across England are facing budget uncertainty beyond 2020 because they will not know what future years arrangements will be until the spending review takes place next year.
He said that the ASCL will be making representations that beyond this date the increased contribution rate should be fully funded.
The move follows an assessment of the teachers’ pension scheme which took place in 2016 and led to the government’s Actuary Department completing its calculations.
The assessment by the government of the public sector pensions liabilities has, according to the Financial Times, led to them demanding increased payments of up to £4 billion across the entire sector to cover these future liabilities.
Prospect of budget restrictions to pay for increasing pension contributions
The DfE’s email about potential budget squeezes has not gone down well with headteachers who say that government funding is falling in real terms and they are already making budget cuts with the prospect of further budget restrictions to pay for increasing pension contributions making life more difficult for headteachers and teachers alike.