Trust bosses are lobbying council chiefs to cut “unfair” support staff pension contributions, as leaders eye new savings to help weather the expected financial storm.
Academy chains in West Yorkshire believe they are having to pay millions of pounds more than schools under local authority oversight to cover higher pension costs.
The row has prompted calls for the government to examine how contributions vary “hugely” between pension providers across England, with some branding the situation a postcode lottery.
Jean Boyle, a partner at the Stone King law firm, said: “We are seeing academy trusts becoming increasingly eager to understand their pensions obligations, particularly taking into account their overarching duties to ensure value for money.”
‘Unfair’
The local government pension scheme is managed locally by over 80 councils. LGPS employer contributions vary in each area, with levels influenced by the school’s age profile, salary levels and length of service of staff.
Now 26 academy trusts – covering 175 schools – are lobbying pension fund chiefs in West Yorkshire to “standardise” LGPS contributions in all schools to ensure that “children are treated equally”.
The row centres on proposals for academies to pay, on average, 15.5 per cent, while those under local authority oversight paid a maximum of 12.8 per cent. The chains estimate this equates to a £13.4 million difference.
Victoria Birch, chief financial officer at Beckfoot Trust, said: “This is not about avoiding costs, it is about fairness.
“Schools work hard to shield children from financial pressures, but the way pension costs are applied makes that increasingly difficult.”
Pension fund hits back
Politicians have also been roped into the dispute, with a motion put before Bradford council this month calling for an end to the “two-tier system”.
Andrew Thornton, who chairs West Yorkshire Pension Fund advisory panel, told the meeting it was “incorrect” to say that academies were treated unfairly.
“I can understand the notion that you want to see the different employers and people delivering the same thing having a similar pension contribution – but that’s not how it works. The majority of LGPS pension funds do this in the same way.
“If academy schools pay less in contributions now than the actuary recommends, when the calculation is done again in three years’ time they will need to pay.”
Noting that contributions for the Teachers’ Pension Scheme (TPS) are 28.7 per cent, Thornton added: “Be careful what you wish for.”
A West Yorkshire Pension Fund spokesperson stressed that it tries to treat all employers participating “consistently and fairly”, with contribution rates falling by “2.1 per cent for the vast majority of academy trusts”.
Cheshire ‘precedent’
Leaders in West Yorkshire have also pointed to changes made to the Cheshire Pension Fund. It was approached last year to “align employer contribution rates for academies with those of local authority-maintained schools”. The proposal was approved.
At the time, academies were paying 20.9 per cent on average, with levels ranging from 13.8 per cent to 36.8 per cent between individual schools. Maintained schools contributed between 20 and 23.7 per cent.
A Cheshire West and Chester Council spokesperson said: “Under the new approach, most academies will see their rates reduce to 18 per cent.”
DfE calls
In Buckinghamshire, leaders have also questioned plans for academies to pay employer contributions of 21.1 per cent, down from 22.1 per cent in 2025-26.
They think rates should have dropped further as the pension fund is now in surplus, having been in deficit the last time contributions were reviewed.
One leader, who asked not to be named, said: “With the pay awards for staff and a 2 per cent – if you are lucky – increase in funding, all schools may have to cut staff, cut curriculum, cut teaching, cut learning support at a time of massive change in the inclusion agenda.
“A saving in contributions to pensions would have helped mitigate these issues significantly.”
Trusts believe council rules preventing pension contribution changes of more than one percentage point have prevented the rates from dropping further.
‘Consistent’ approach
Robert Carington, Buckinghamshire’s pension fund committee chair, said the move was “consistent with the approach taken that has enabled the academy pool to move into a small surplus”.
His “priority is to maintain that surplus and ensure the stability of employer contributions”, particularly with “what is currently a difficult geo-political period”.
Boyle added: “For many years, academies have had very little knowledge of the workings of the pension funds in which they participate and have often felt overwhelmed by the technicalities of the schemes.
“However, we are increasingly seeing academy trusts actively engaging with pension funds and relevant professional advisors to understand and, in some cases, appropriately challenge pension funds.”
