Pension Position

Information regarding payments when converting from a school to an academy...

Under existing arrangements school staff will either be members of the Teachers Pension Scheme (TPS) or the Local Government Pension Scheme (LGPS). Teachers are members of the TPS and support staff are members of the LGPS. The Local Authority is responsible for collecting and paying employer and employee contributions and submitting data for both schemes. Following conversion the academy will take on these responsibilities.

The Department for Education provides guidance to academies on this issue which can be found on this link DfE.

Teachers Pension Scheme

Conversion to an academy does not throw up any major issues for the TPS. Parliament takes the decisions regarding the management of the scheme and a new academy is required to make the payments to the scheme and provide the appropriate data.

Local Government Pension Scheme

The position for support staff is more involved and the DfE has issued a Briefing Note on the implications for academies.

As a new entity academies will need to register with the LGPS to be a scheduled body employer and, as with the TPS, take on responsibility for payments and data transfer etc. Existing support staff are already members of the LGPS and are unaffected by conversion. New support staff will need to be automatically enrolled, provided they have a contract for 3 months or more, although they can opt out provided they give notice within 3 months. All support staff have the right to join the LGPS.

There have been issues with academies employers contributions  being higher than maintained schools as the administrators of the LPGS saw academies as “higher risk” than the local authority. This has been addressed by a ministerial statement issued in July 2013 where the government will provide a guarantee to cover all academies pension liabilities. This should ensure that academies are treated on the same basis as local authorities.

It should also be noted that many LGPS pension funds are running in deficit. If this is the case for your school then the impact of conversion in these situations will result in the academy having a actuarial calculated deficit being transferred to the school from the local authority and appearing on its balance sheet as a liability. This can be a substantial sum and can exceed the value of the academy's assets. However, given the nature of the liability, this does not mean the academy is trading whilst insolvent.

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