There have been some significant challenges for independent school heads and governors lately, including recruiting pupils in a time of Brexit, responding to issues from the Independent Inquiry into Child Sexual Abuse, Black Lives Matter, Everyone’s Invited, and of course everything to do with Covid.
Leadership teams have largely coped magnificently with these. In addition, however, they have also had to think about, or possibly navigate through, the choppy waters provided by changes to the Teachers’ Pension Scheme.
Employers used to contribute an additional 14.1 per cent of salary to their staff’s TPS pensions. Results from ongoing actuarial reviews of TPS have led to increases to 16.48 per cent (September 2015) and 23.68 per cent (September 2019).
Latest estimates seem to be that the next increase is likely to be to around 30 per cent (September 2023). This is estimated to need to be even higher based on the McCloud and Sargent judgements where changes to pensions were found to be guilty of age discrimination.
“Is it the best use of a charity’s funds to devote such a significant amount of income to pensions?”
All of which leaves governors, bursars and therefore heads asking some quite existential questions in their schools: are such increases, which even for smaller schools will cost hundreds of thousands of pounds, viable? Is it the best use of a charity’s funds to devote such a significant amount of income to pensions, regardless of fame, wealth and possibly already eye-watering levels of fees?
Staff are any school’s best asset, but is there a ceiling on cost, when TPS far outstrips most people’s pension provision? Many ISC schools have either withdrawn already from TPS, are consulting to do so, or plan to consult in the next year.
TPS is unique among the ongoing challenges. With all the others, a school can address them as one body with a shared vision and purpose. The TPS challenge is different; it divides. It potentially pits governors against staff, bursars against heads, senior managers against colleagues. Add in a pinch of union presence or a dash of bad press and adverse parental comment, and we have the possibility of a very ugly recipe indeed.
“The TPS is unique among the ongoing challenges for independent schools: it divides.”
At Hill House, we are one of the fortunate schools, who seem to have navigated the TPS process reasonably safely, despite a few storms and rocks along the way. We leave TPS in August this year, but there are various areas where we were fortunate (or made our own luck).
We have often included the staff in conversations about finances. They know that pupil numbers matter and that the school has to be competitive in the market. They are aware of the importance of balancing the books, that surplus means investment, and are largely aware that there is no “magic money tree.” This background helped enormously in our efforts to prevent any of the disruptive industrial action which has sadly been seen in a few other cases.
We wanted to avoid the pitfalls of the pensions’ discussion being set up as management versus staff; governors were, thankfully, happy to be seen to be implementing their own decision to consult. Two governors attended the presentations and further meetings, meaning that the headmaster could attend, but more in a capacity of helping clarify rather than leading the process. We ensured there was no daylight between bursar and headmaster and employed an actuarial company to present to staff and guide us through the process.
The staff reaction was initially mixed, ranging from the accepting and understanding to those who needed more time to understand the seriousness of the position. Younger colleagues rather liked the idea that the result of the process might be more take-home pay, whereas some thought the school should find other ways of funding TPS, and even made some creative but ultimately unrealistic suggestions.
“Staff quickly understood that the cost of TPS is an issue which is not going away.”
Some colleagues took a while to appreciate that the school did not actually need their agreement at the end of the consultation process, while a very comprehensive responses to each question posed by the representative committee helped smooth the waters. Compromises were made; the governors agreed to the main request, which was to delay implementation by one term, and have added various benefits back in such as in- service death and critical illness benefits.
A key final element was that staff quickly understood that the cost of TPS is an issue which is not going away and will only get even more prohibitive for most schools. They realise that it will not be restricted to independent schools, and that local authority schools will soon have to find the money from somewhere. Any school except the very richest will doubtless have to incur even bigger class sizes and reduced investment if they are to stay in TPS. But then the staff are a school’s greatest asset…