Clarification on Teachers Pension Scheme and Local Government Pension Funding Changes

Update from Dean Mitchell (Dean.Mitchell@cornwall.gov.uk)

 During the recent Cornwall Schools Funding Consultation Webinar (link below) I mentioned that the funding released from the reduction in employers' teacher pension contributions would remain within the overall education budget to help offset the cost of pay awards. This was not correct.

 To clarify, it is the reduction in LGPS employer contributions that is being retained within the overall education budget and not removed. 

‘In the recent update to schools, it was noted that funding from the decrease in employer contribution rates for the Teachers' Pension Scheme (TPS) would remain within the national education budget to offset pay awards in 2027/28.

This should have referred to the Local Government Pension Scheme (LGPS). As a clarification, our current understanding is that:

·         The government has announced that, from April 2027, employer contribution rates for the Teachers' Pension Scheme (TPS) will decrease from 28.6% to 17.6%. Funding for schools will be adjusted to reflect the reduction in pension costs at a national level and is intended to be cost-neutral for the sector overall.

·         Recent valuations of the Local Government Pension Scheme (LGPS) have resulted in an average reduction of 4.9 percentage points in employer contribution rates. The Government has confirmed that these savings will not be clawed back and has stated that it is therefore confident schools will be able to meet the costs of the teacher pay award at a national level.

·         The exact impact on individual school budgets will not be known until the Department for Education publishes the 2027/28 funding rates and associated guidance later this autumn’