ISBA

Should my school stay in TPS? With further TPS cost increases expected from April 2024, and a new Phased Withdrawal option possible from September 2021, you should be assessing your TPS options this academic year. This then leaves time to run a thorough consultation process and implement any change ahead of April 2024. What are the alternative pensions options for teachers? As the market has developed, there are now a range of solutions for managing the TPS cost increases: 1)Moveall teachers toaDCscheme This is the most straightforward solution and gives cost certainty, but generally imposes a change on teachers. 2) Total rewardsolution With this solution, teachers are given the choice of opting out of TPS into a DC scheme or staying in TPS with a reduction in pay to fund the additional TPS costs. This approach gives teachers a choice but may not be a sustainable solution for the long-term if TPS costs continue to rise. 3) Phasedwithdrawal solution Further to the November 2020 DfE consultation outcome, this option is now available. Under this approach a school keeps current hires in TPS but makes alternative pension arrangements for new hires. This doesn’t disturb pension benefits for current teachers and gradually addresses the increased costs in TPS. tion. How do you run a successful consultation process? If you decide you want to develop a proposal for exiting TPS, it’s crucial to get that proposal and the accompanying consultation process right. From our experience of working with schools that have already exited TPS, these are the key areas to get right: 1)Acompellingbusinesscase Your teachers will understand the need for change if the business case is compelling. For example, the change may be required to achieve control and stability over your pension costs, or to enable investment in other areas to ensure the long-term sustainability of your school. 2)Adecent replacement offer Maintaining the school’s spend at 16% (or at the recently increased rate of 24%) enables themessage to be about stabilising rather than reducing cost. A 16%employer contribution rate remains very competitive relative to broader UK pension contribution levels, and in many cases will provide a reasonable retirement income based on modelling we’ve completed. 3)Agenuineconsultationprocess Your consultation process needs to be genuine, open and bring teachers with you. It is not a ‘done deal’. Listen to teachers and representatives during the consultation process, and consider revising your proposal to address their feedback. Want to find out what your TPS options are and the lessons we’ve learnt from helping schools exit TPS? Please visit our website: https://www.hymans.co.uk/ services/pensions-advice-for-independent-schools You need to be assessing your TPS options this academic year if you want to have time to implement change before April 2024. Please get in touch if you would like to discuss your options. Alistair Russell-Smith Head of corporate DB Consulting T 020 7082 6222 E Alistair.Russell-Smith@hymans.co.uk About Hymans Robertson Hymans Robertson is an award-winning pensions consultancy established for 100 years. We advise over 100 third sector and charity clients, including independent schools. We have successfully guidedmany of our independent school clients through a TPS exit, right through from the business case to the consultation and final implementation.