Teachers’ Pension Scheme reforms benefit teachers while uncertainty remains for heads

New Fair Deal for public sector pensions

The New Fair Deal is a policy which allows employees of certain public sector employers to continue membership of their public sector pension scheme if their employment is transferred under TUPE to a private sector employer. The New Fair Deal came into force on 1 April 2014.

It does not apply to all sectors (for example, HE and FE institutions, independent schools and schools where employees are employed by a local authority – where the existing Local Authority Best Value Direction continues to apply). However, New Fair Deal will benefit teaching staff in academies (including multi academy trusts, free schools and studio schools) whose employment transfers from an academy trust to a trading subsidiary established, for example, to operate a nursery or SEN services.  These employees will now be entitled to continue membership of the TPS. The new policy applies to employees whose employment transfers to a private sector employer but does not cover new employees who are recruited by the private sector employer after the TUPE transfer of employees from the public sector.

The new employer will need to enter into a participation agreement to become a participating employer in the TPS and to ensure that it fulfills its obligations. In addition, a bond or indemnity may be requires to protect the funding of the scheme.

The TPS has published guidance on its website on the application of the New Fair Deal.

Executive headteachers may not be eligible for the Teachers’ Pension Scheme

In recent months we have seen a number of multi-academy trusts (MATs) established or federations appointing executive headteachers and so it may be a timely reminder to note that, whilst it is a long established principle of the TPS that a headteacher is eligible for membership of the TPS as academic head (even if they are not actually engaged in “teaching” duties), this is not always the case for an executive headteacher.

Where an executive headteacher occupies a mainly administrative or financial role, he or she would not normally be eligible for membership of the TPS.  This will depend on the job description of the executive headteacher and the role that he or she plays in practice. Eligibility is determined on an individual basis by the employer, in accordance with the criteria set out in regulations.  If an executive headteacher is enrolled in the TPS and it transpires that they are ineligible, the TPS may take action and contributions would then be refunded.

The potential risk could be significant for any MAT enrolling an employee as eligible in circumstances where they do not satisfy the criteria for membership, particularly as an executive headteacher is likely to have a higher salary and greater benefits in the TPS.

The TPS have in the past made it clear that it is the employer’s duty to determine whether an employee is eligible for membership.  A MAT or federation should therefore carry out an early assessment to determine whether its executive headteacher is eligible for membership of the TPS.

For more information please email Sarah Forster or call 0191 211 7910.