Scenario 1

School 1 decides to stay in the Teachers’ Pension Scheme (TPS) and make no changes to their current arrangements.

All existing, and future, eligible teaching staff will have access to TPS, where they will continue to build up their pension benefits, unless they choose to opt out.

The school and teaching staff will pay the contribution rates set by the government, both now and in the future.

They’ll need to continue to run two pension schemes, or more if applicable, one for teaching staff and another for non-teaching staff.

The school can review their arrangement and leave TPS at any time.

Potential benefits

• No need for contractual changes or a consultation period.
• No requirement for financial or legal advice, therefore no additional professional costs.
• No change to the costs of administering the scheme.
• The value of employees’ pension benefits at retirement are likely to be higher than those they’d build up in any alternative pension scheme.
• Future teaching staff are able to join TPS, or retain access if they come from a school that offers TPS, which could be an advantage when recruiting.

Key considerations

• The government will continue to set the future employer and employee contribution rates and increases to TPS, potentially meaning further increases in the future.
• The cost of administering TPS could be higher than other workplace pension options.
• No potential National Insurance Contribution (NIC) savings for employees.
• No tax relief for those who earn less than the Personal Allowance.