By Neil Smith, ASCL Independent Sector Specialist, and Melanie Moffat, ASCL Pay and Conditions Specialist: Pensions

Following the latest actuarial valuation of the Teachers’ Pension Scheme (TPS), published on 1 July 2026, employers’ contributions to teachers’ pensions will fall by 11% to 17.6%. This will come into effect on 1 April 2027.

For independent schools who have remained in TPS, the news of the rate’s reduction will provide an unexpected end-of-term bonus as they will no longer have to shoulder the burden of the 28.68% contribution they have been paying since 2024. 

However, since 2019, many independent schools have chosen to either completely leave TPS or have introduced a hybrid scheme whereby staff had the option of joining an alternative defined contribution (DC) scheme, or remaining in TPS but sacrificing annual cost of living allowances, or agreeing to either a reduction in salary or a pay freeze if they chose to remain in TPS. 

Practical difficulties
With such a ‘total reward’ approach, it could be argued that schools have established a principle which links the amount of salary a teacher receives to the amount of pension contribution which is paid to them by their employer. As the amount of contribution to TPS will fall considerably from next April, in the interests of equity school governors may therefore need to consider what salary level will be appropriate for staff remaining in TPS if the contribution to a DC scheme is higher than 17.6%. 

The main practical difficulties for schools in this position are likely to be:

1. Budgets for next year will already have been decided and signed off, and governors and leaders will need to give careful thought to how they propose to agree on a suitable ‘top up’ salary for staff who will be in TPS from 1 April 2027.
2. Related to this, schools may well find themselves having to operate at least three different teacher pay scales from next April: one for staff who decided to stay in TPS, and took a reduction in salary; one for staff who decided to join a new DC scheme, with the appeal of a higher salary, and who will continue in a DC pension scheme; and finally, another scale for staff who left TPS and received a higher salary but who now wish to rejoin TPS and may well receive a further salary enhancement due to the lower contribution their employer will be making to their pension. 
3. Schools may find themselves having to reassess staff who request to re-join TPS, to establish whether they are eligible to do so. This can be a complex process depending on individual circumstances, and schools also need to be mindful the of rules around auto-enrolment. Guidance on this can be found in this TPS document.  

As ever, leaders would be advised to maintain a transparent and fair approach to dealing with the scales they implemen, in order to minimise the risk of any staff feeling as though they are not being treated appropriately.
In particular, careful attention should be paid to potential tension points in teacher pay scales, i.e. where a member of staff with a responsibility could be receiving less pay than a colleague, simply on account of their individual historic approaches to their pension.

Of course, there may also be pressure from teaching staff or other unions for the school to consider fully rejoining the scheme. It is possible for a school to cease a phased withdrawal and rejoin TPS, but the disruption caused by a further staff consultation, accompanied by the fact that a further actuarial valuation will follow in four years’ time and contribution levels could increase again, may prove to act as a deterrent to such a request.

Greater stability is needed
The response to the latest change in employers’ contributions will be highly specific to each school and although in many cases the impact is likely to be minimal, there will be schools for whom the change may result in complex negotiations over the total reward provided to staff. ASCL, and other organisations, are keen to see greater stability emerge in future valuations as we recognise the uncertainty and wild fluctuations these can create for independent schools who are already dealing with considerable uncertainty and financial pressures: the previous increase in contributions resulted in considerable disruption in staff rooms across the country, with strike action and other examples of industrial unrest having a detrimental impact on leaders’ wellbeing and, in some cases, relations between leadership teams and the wider staff body. 

ASCL’s position is that we believe that TPS is the best scheme for our members, but we do recognise that the circumstances in each setting will vary. However, we hope that where individual staff who are eligible to rejoin make such a request, it will be responded to sympathetically, and with a pro-active approach to establishing whether this is a) possible and b) in their best interest - both being dependent on individual school and member circumstances. 

Ultimately, however, leaders will find it most helpful to be transparent in communicating to governors and staff about the changes in contributions, and involving appropriate stakeholders within the school in their decision-making process.