Pension grants funding is falling short by tens of thousands of pounds for some schools, headteachers’ unions have warned the education secretary.
Association of Schools and College Leaders general secretary Pepe D’Iasio and NAHT general secretary Paul Whiteman have written to Gillian Keegan raising concerns that the Teachers’ Pension Employer Contribution Grant (TPECG) does not cover the costs of increased contributions for many schools and trusts.
Employer contributions to the teachers’ pension scheme increased by five percentage points from 1 April 2024.
The letter reads: “We have heard from a number of members that there is a shortfall. This is often substantial. Examples from across the sector have included amounts of £70,000 or more.”
Mr D’Iasio and Mr Whiteman said they are “extremely concerned” about the impact of the shortfall, given the cost pressures schools are already facing.
“While we have raised this matter with you and department officials, the advice to ‘encourage our members to contact the department directly with information about the shortfalls they are experiencing’, does not seem to be a solution to this issue, albeit a helpful gesture,” the letter says.
Calls for supplementary fund
The last time there was an increase to employers’ contributions to the teacher pension scheme, in 2019, schools were able to apply to a separate supplementary fund if their staffing structures meant costs exceeded the grant they received.
If they were successful, this extra uplift was applied every year to a school’s allocations.
The DfE announced £1.1 billion in extra funding through the TPECG in March 2024. However, the grant does not include a supplementary fund for schools facing a shortfall.
Mr Whiteman and Mr Di’Iasio have urged the DfE, in their letter, to introduce a supplementary fund for 2023-24.
Schools and trusts face severe funding pressures as they continue to deal with the impact of increased staff and non-staff costs.
Schools are also still awaiting the School Teachers’ Review Body’s recommendation for this year’s teacher pay rise. However, multi-academy trust leaders have warned that budgets are so tight that anything above 2 to 3 per cent is “unaffordable”.
The Institute for Fiscal Studies has calculated that schools need at least £700 million more in their budgets for next year to meet expected cost rises.
‘Sector locked in a downward spiral’
The letter warns that the result of these funding shortfalls, including pension contributions, is that many schools are setting in-year deficits and will have to make further cuts to balance their budgets.
Mr Whiteman and Mr Di’Iasio ask Ms Keegan in their letter to “continue to represent to the Treasury and the Cabinet the seriousness of the financial situation facing schools, trusts and colleges, and the necessity of additional funding as a matter of urgency”.
They added: “The sector is currently locked in a downward spiral of underfunding and cuts, and we fear that despite the best efforts of school and college leaders to minimise the impact on pupils and students, it is inevitable that educational provision will suffer.”
A DfE spokesperson said the additional £1.1 billion next year to help schools meet the costs of their teacher pension contributions “won’t match each individual school’s precise costs. Schools rightly have autonomy over their spending and we allocate funding in a way which targets those with greatest need.”
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