Pensions and investment organisation Broadstone has seen independent schools bring forward consultations about leaving the Teachers’ Pension Scheme (TPS) over financial worries following the Covid-19 outbreak.
The TPS increased employer contributions by 40% in September 2019, resulting in over 100 independent schools quitting the scheme.
Neil Barton, head of business development, trustee solutions, at Broadstone, told IE: “What we’ve seen since lockdown is an increase in enquiries from independent schools that are thinking of exiting the Teachers’ Pension Scheme and need our assistance to do that.
“There were schools that were planning to launch consultations in September or early next year with a view to getting out of the TPS either early next year or September next year, but now they’re thinking of accelerating those processes because it’s just become more and more critical.
“They’re predicting their financial situation will become increasingly dire because of the reduction in income they’ll be suffering from because of the lockdown period.
“There were already issues around potentially falling pupil numbers, but the Covid-19 situation has accelerated all of that and made them worry even more about the ongoing financial viability of the independent school sector.”
They’re predicting their financial situation will become increasingly dire because of the reduction in income they’ll be suffering from because of the lockdown period
Barton explained that whilst independent schools’ costs haven’t necessarily gone up as a result of Covid-19, income has come down due to fee discounts being offered to parents.
“One school we’ve been talking to was saying the decrease in fees that they’ve had to offer to parents, which can be anything between 20% and 50%, has had a big hit on their own income, whereas the costs of providing the services that they provide haven’t really decreased that much because there’s a lot of online learning going on.
Independent schools are concerned about whether all of their pupils will return in the next academic year. “Parents that own small businesses may have been particularly badly hit by Covid-19 and therefore may not send their children back to the schools,” said Barton.
Boarding schools are also worried about dips in international student numbers. Barton said: “I know a lot of boarding schools are concerned. Often, they have pupils come from overseas, will those pupils be able to return? Will the schools even be able to open by then? We just don’t know at the moment.”
Barton said there are things schools can do in the short term to help reduce their costs, but these will need to be considered carefully.
“Read all the material that’s around and if you’re particularly worried about pensions, approach a reputable pensions consultancy and have a conversation with them,” Barton advised.