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Pension shortfalls of up to £70,000: School leaders call for supplementary fund

School funding and finance Government policy Whole-school issues
Shortfalls of “often substantial” amounts in the teachers’ pension grants paid to schools have sparked pleas for government to launch a supplementary fund to help protect school budgets.
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The Teachers’ Pension Employer Contribution Grant (TPECG) is supposed to cover the additional cost of a 5% increase in the employer contribution rate for teachers’ pensions.

However, the National Association of Head Teachers and the Association of School and College Leaders are reporting significant shortfalls in some schools – including some cases amounting to as much as £70,000.

The 5% increase was introduced from April 2024 after a valuation of the Teachers’ Pension Scheme undertaken by the Department for Education (DfE) in autumn 2023 found it was necessary to “meet present and future obligations” (DfE, 2024).

As such, the DfE unveiled in March an additional £1.1bn via the TPECG for the 2024/25 financial year to help fund these costs.

However, in a letter to education secretary Gillian Keegan this week, ASCL and NAHT have now called for a supplementary fund to be introduced similar to that which was set-up in 2019 when the TPECG was first introduced.

The letter, which is signed by the unions’ general secretaries Pepe Di’Iasio and Paul Whiteman, says that all schools facing shortfalls should be allowed access to such a fund.

They write: “Based on the ready reckoner published by the DfE, 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. For those in special schools, where higher staffing ratios are required, this is likely to be even more substantial.

“We are extremely concerned about the impact these shortfalls will have, given that these are occurring in the context of substantial cost pressures in schools more widely. This includes a nationally agreed salary rise for support staff in 2023/24 which schools do not have funding to deliver, and the inadequacy of funding for SEN provision. The result is that many schools are setting in-year deficits and will have to make further cuts in order to balance their budgets in future years.”

The letter says that the 2019 supplementary fund was “an extremely welcome solution” at the time and urges the DfE to introduce a similar fund for 2023/24 “as a matter of urgency”.

The letter adds: “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.”