The Department for Education must provide “a full explanation” as to why £7 billion set aside to compensate teachers discriminated against in the Teachers’ Pension Scheme (TPS) has been cut in half, a union has said.

The money is being kept to cover the cost of implementing the Court of Appeal ruling known as the McCloud judgement. It found that younger teachers were unlawfully discriminated against in 2015 when their condition in the TPS was changed from final salary to career average arrangements.

Last year’s annual report and accounts state that £7 billion had been set aside for “past service cost” to cover the compensation, which could be owed to hundreds of thousands of teachers.

But the latest TPS annual report and accounts, published last week, show that just £3.6 billion is now being kept for the McCloud case.

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The NASUWT teaching union said teachers “deserve a fuller explanation from the DfE about why the estimated cost has fallen so sharply”.

Uncertainty over teacher pension compensation

The union has already warned that teachers themselves may indirectly have to foot the bill for the compensation payments - because the money is set to be taken from cash meant for improving the accrual rate of the TPS.

NASUWT general secretary Patrick Roach said: “The NASUWT has attended several meetings with the Treasury and the Cabinet Office about the McCloud judgement and its implications for the TPS. However, there still seems to be considerable uncertainty about how the McCloud costs will play out at individual public sector pension scheme levels.

“For example, the younger the workforce, the cheaper the costs of McCloud, because a larger part of the workforce does not fall within the scope of the remedy.

“It might be that an analysis of individual scheme data has led to a revision of the McCloud costs, and teachers deserve a fuller explanation from the DfE about why the estimated cost has fallen so sharply.

“However, the chief point remains that in putting right an unlawfully discriminatory policy imposed on teachers by the government, it is unacceptable that the government should expect teachers to pay the cost, however much that may equate to, of ensuring the government complies with the law of the land.”

The DfE has been contacted for comment on why the £7 billion has been almost halved.