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Funding to cover the increased employer pension contribution costs confirmed for schools in England

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The Department for Education (DfE) has confirmed that it will fund the increased employer pension contribution costs that state-funded schools and colleges in England will have to make for the year 2019-20. Funding for post-2020 will be considered as part of the comprehensive spending review.

The employer contribution rate of the Teachers' Pension Scheme (TPS) will increase from 16.4% to 23.6% from September 2019. Following consultation, the DfE has committed £848 million to cover this increase for September 2019 to March 2020 (and for academies the five months from April to August 2020).

The DfE will split the £848 million into a main grant and a supplementary fund of £22 million. Schools will be able to apply to the fund if their grant allocation falls short of their actual pension cost increase between September 2019 and March 2020 by more than 0.05% of their overall budget for this period.

Further details of how schools will be able to apply to this fund will be provided in the autumn.

Grant allocations

Alongside the confirmation of funding, the DfE has also published the rates for primary, secondary and special/alternative schools here. The rates are based on the following:

  • For mainstream schools the grant is based on pupil numbers (those aged two to 19 years); for schools with fewer than 100 pupils, the DfE will allocate funding as if they had 100 pupils
  • For those institutions supporting children with high needs, funding is based on the number of places offered; for those with fewer than 40 places, the DfE will allocate funding as if they had 40 places;
  • Funding is split between primary (including early years), secondary (including school sixth forms) and special schools, and an area cost adjustment (ACA) has been applied that takes into account higher teacher wages in London and the surrounding areas (inner London, outer London, London fringe and the rest of England).

The Education and Skills Funding Agency (ESFA) will pay the funding for maintained schools to local authorities, which will be required to pay it to individual schools. Funding for academies will be paid at the published rates directly to academies by the ESFA.

School and local authority level allocations

The Department for Education has now released the school and local authority level allocations for the pension grant, covering the period September 2019 to March 2020.

Alongside this, they have also released guidance to local authorities on how they must implement the pension funding. This confirms that local authorities must pay all nursery, primary, secondary, all through and 16-19 schools their allocated amount, regardless of any deficit relating to the expenditure of the school’s budget share.

Local authorities will determine how much to distribute to their high needs settings after consultation with each of them.

Supplementary fund

The pension supplementary fund provides additional support alongside the teachers’ pension employer contribution grant (TPECG), for the cost to schools due to the increase in the employer contribution rate to the teachers’ pension scheme from September 2019.

The application window for mainstream schools will run from 2 December 2019 to 17 January 2020. Schools can expect to receive payments in March 2020.

Maintained schools will apply directly, and multi-academy trusts will apply on behalf of their mainstream academies. Special and alternative provision academies will need to apply through their local authority in the second application window, which will be in April 2020.

You can access full details here

First published 30 October 2019