Every four years, the Government’s actuary department performs a valuation of all public service pension schemes, including the Teachers’ Pension Scheme (TPS). The rationale of the valuation is to assess the cost of pensions being provided to members of each scheme and to establish suitable employer and employee contribution rates.
Consequentially from the most recent valuation, the Government has determined that the employer portion of the pension contribution will be increased to a rate of 23.68% of pensionable pay with effect from 01 September 2019.
On the 15 January 2019, the DfE launched a consultation to obtain viewpoints on their proposal to support educational institutions following the increase in TPS for 2019/20, this closed on 12 February.
The Teachers’ Pension Grant
Following the consultation, it was gauged that the total cost of the increase in employer contributions to the pension scheme from September 2019 – March 2020 to be £848m. To support schools and academies through this change, the DfE have agreed to provide this amount of funding through a grant and additional supplementary funding.
Due to the lack of data provided by the TPS to central government around individual schools’ contributions to the pension scheme, to match the funding as closely to costs in the most reasonable way, the DfE have apportioned this funding based on a per pupil formula.
The grant covers the seven months of financial year 2019 to 2020 from September 2019 to March 2020, this approach will also be used to make payments for academies in the five months from April to August 2020. As well as this, schools will be able to apply for a supplementary fund if their grant allocation falls short of their actual pension cost increase by more than 0.05% of their overall budget for the period September 2019 to March 2020, meaning all costs above that threshold will be reimbursed.
Maintained schools and academies will be paid using the 2019 to 2020 rates from September 2019 through to March 2020. Academies will also be paid using these rates for the period April to August 2020. Eligible academies will also receive payments from the supplementary fund to cover this period. Funding for maintained schools from April 2020, which is the start of their financial year, and further funding for all schools, will be confirmed as part of a wider spending review conducted by the DfE.
Grant Rates
| Primary | Secondary | AP/ECHP | |
| Inner London | £92.20 | £135.71 | £336.53 |
| Outer London | £85.29 | £125.55 | £311.33 |
| London Fringe | £79.85 | £117.53 | £291.44 |
| England & Wales | £77.50 | £114.08 | £262.89 |
Who is eligible?
State-funded schools
The DfE is providing the grant to the following types of schools:
- Mainstream and special maintained schools
- Mainstream and special academies (including Alternative Provision, 16-19
- Academies and free schools)
- Maintained Nursery Schools
- Non-maintained special schools
- Independent Special Schools
- Local Authority Centrally Employed Teachers
- Music Education Hubs
FE colleges and other public-funded training organisations:
- Further Education Colleges
- Sixth Form Colleges
- Designated Institutions (including the new designated institutions that form part of
- HE provider group structures)
- Specialist Post-16 Institutions
- Adult & Community Learning Providers
Paying the grant
The Education and Skills Funding Agency (ESFA) will pay the funding for maintained schools to local authorities, who will be expected to pay it to individual schools at the rates published. For academies, the funding will be paid at the published rates directly to academies by the ESFA.
Depending on the local circumstance, the ESFA will pay funding to local authorities to distribute for the following:
- Institutions who provide for children with high needs
- Pupils with EHCPs who are educated in independent settings
- The exception to this will be non-maintained special schools. The ESFA will allocate funding directly to non-maintained special schools.
If you require support to allocate this funding and ensure you have budgeted correctly, book a consultancy visit with one of our expert finance consultants by clicking the link below.
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