Haslers

Education Bulletin

Pension Scheme Changes – Financial Challenges Ahead

Considering the recent pension scheme changes, schools are facing financial challenges due to an increase in employer contributions to the Teachers’ Pension Scheme, which rose significantly this April from 23.6 per cent to 28.6 per cent.

Despite a Government promise of £1.1 billion in additional funding to cover this rise for state schools, there are growing concerns about potential shortfalls in grant allocations that could force schools into financial distress.

The increase, intended to be offset by Government funding, has been distributed based on variables, such as pupil age and additional support for pupils eligible for free school meals.

However, school leaders report that this method of calculation might disproportionately favour schools in more deprived areas, leaving others to manage with less than anticipated funds.

With full school-level allocations for the 2024-25 academic year yet to be released, the Department for Education has provided schools with an online calculator to estimate their funding.

Feedback from school leaders indicates significant shortfalls, with some reporting deficits of £70,000 or more, a situation even more pronounced in special schools due to their higher staffing requirements.

The severity of the funding discrepancies has prompted the leaders of the ASCL and NAHT school leadership unions to call for the re-establishment of a supplementary fund.

This fund was previously available in 2019 when a similar increase in pension costs occurred, allowing schools whose actual pension cost increases exceeded their grant allocation by more than 0.05% of their budget to apply for additional financial support.

This funding challenge comes at a time when schools are already under pressure from other cost increases, including nationally agreed salary rises for support staff and inadequate funding for special educational needs provisions.

Many schools are now facing the prospect of setting in-year deficits and are being forced to consider further budget cuts.

If you are concerned about how additional pension contributions and costs may affect your school’s finances, please contact us.

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