Top 10 tips when considering withdrawing from the Teachers’ Pension Scheme

2 May 2019

Schools will be aware of the increase in employer contributions under the Teachers' Pension Scheme (TPS) that will apply from September 2019. The Department of Education has confirmed it will help maintained schools and academies meet these additional costs and for now, the focus is largely on independent private schools.

Wilsons are advising a number of independent schools who are considering withdrawing from the TPS and have prepared our 10 top practical tips for schools that are in the same position.

10 top tips

1. Take time in preparing the business case

The business case should be governor led. It is essential that governing bodies carefully prepare the school's business case containing the rationale for proposing to withdraw as this is the first document that sets out why withdrawal is being proposed and will be relied upon to justify any subsequent withdrawal from the TPS. Wilsons can provide schools with an advice note to assist schools in preparing their business rationale.

2. Timing is key

Most schools will be seeking to avoid or limit the increased contributions by withdrawing from the TPS by either September 2019 or January 2020. Schools should put together a timetable (taking into account holidays and governors meetings) for each step of the consultation period. This will serve as a checklist to ensure your school has carried out all the relevant steps under employment law and will also give you an indication as to whether the school is likely to be able to withdraw by their desired date as the consultation progresses. Consultation is fluid, so you should build in some extra time into your timetable as it is likely collective consultation will take longer than expected. Be prepared for some pushback on your timescales, some unions are advising there should be a 60 day, or in some cases, a 90 day consultation period.

3. Check your employment contracts

In line with tip 1, check your contracts at the outset to establish employees' notice periods. Notice periods typically vary from 1 – 3 terms' notice, depending on seniority. If staff do not agree to the proposed changes and the school decides to withdraw from the TPS following consultation, the school will have to consider giving notice to terminate these employees' contracts and offer each immediate re-engagement on the new terms. You will need to give notice in time to ensure these employee's contracts terminate prior to the proposed date to withdraw from the TPS.  For example, if the proposal is to withdraw from the TPS by September 2019, notice must be given to ensure that the employees' employment terminates by 31 August 2019.

4. Consultation must be undertaken "with a view to reaching agreement"

The consultation process must include consultation on the proposed changes "with a view to reaching agreement with the appropriate representatives" on the ways of avoiding dismissals, reducing the number of employees to be dismissed and mitigation the consequences of the dismissals. Whilst the aim is to try and reach an agreement with the appropriate representatives, it does not mean that agreement will be, or must, be reached.

5. Remember it is a proposal to withdraw, not a decision

Ensure all communications make it clear this is a proposal to withdraw and that no decisions have been made. A fair consultation is one that is entered into with an open mind and a willingness to be persuaded to not withdraw from the TPS.  An actual or perceived unwillingness on the part of the school to seek agreement (for example, by suggesting that the decision to withdraw from the TPS has already been made) can expose the school to claims for failure to adequately consult.

6. Make sure the information given to staff is correct

Ensure that all communications, both oral and written, are factually correct. Wrong information will often be picked up by staff and/or the unions and challenged. Giving out wrong information may result in feelings of mistrust between the school and the staff.

7. Be consistent in your communications

Ensure you are consistent in your responses. Keep a running log of FAQs and if a question or similar question has been asked before, refer staff back to the answer already provided. This will also help manage the steady stream of questions. Avoid answering questions that do not relate to the proposal as this is likely to result in the consultation going off track (both in content and timescales).    

8. Keep communications with the unions open 

If the school does not have a recognised union, it is likely that you will still be contacted by various unions whose members may be affected by the proposal to withdraw. You should keep the lines of communication between the school and the unions open as a hostile or unhelpful approach to unions is likely to affect the success of the consultation process.

For schools that do not recognise unions, be aware that some unions are advising their members to consider seeking union recognition in light of the TPS pension contribution increases.

9. Be careful with data

Remember all relevant documents (including minutes of governors meetings and email correspondence) will be disclosable as evidence if an employee brings a tribunal claim against the school. Only evidence that is protected by legal or litigation privilege will not be disclosable during tribunal proceedings. Do not refer to individual employees in any written communications as these communications are likely to be disclosable under a data subject access request.

10. Remind staff you are not providing financial advice

During the consultation process, you will need to set out the alternative pension scheme. You should make it clear that the school is not, and cannot, provide financial advice to staff. Some schools are bringing in an independent financial adviser to meet with staff to talk about their pension which has helped staff understand the differences in the TPS and alternative pension schemes.

How we can help

Wilsons are experts in the education and employment sectors and can provide tailored guidance on the implications of withdrawing from the TPS from an employment law perspective. We have also taken advice from independent pension solicitors to advise on the implications of withdrawal under pension legislation. Our guidance sets out:

•  The key considerations to take on board when considering withdrawal

•  The risks in withdrawing from the TPS and how to minimise these

•  Advice on preparing the business plan

•  How long the consultation period should be

•  The process on how to withdraw from the TPS and carry out consultation

•  A draft timetable setting out the likely timescales for each step

We offer clients a variety of pricing options from advising on the consultation from start to finish, advising on specific phases of the consultation process or advising as and when required.

We also work with experienced HR consultants who can assist schools in carrying out the consultation process.

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