Forced out of the TPS

hyubh

Thrugelmir wrote: »

Similar situation which has faced the private sector since Gordon Brown's raid on DBS pension schemes in 1997.

Erm, absolutely nothing to do dividend tax credits! Insofar as Gordon Brown has anything to do with it, it's in not getting serious about how costly the TPS actually is. Where they participate in it, private sector schools effectively free ride on the generosity of the taxpayer.

Suspect the issue is that as the TPS is unfunded. Employers are burdened with a higher current active employee contribution to help fund the historic fund deficit. A contribution level which may possibly increase in the future.

Apart from the fact the TPS is unfunded, also... problematic. Employers account for the TPS as if it were a DC scheme - i.e. on a cash contributions basis - and actual liabilities are somewhat obscured. The upcoming sharp increase in employer contributions is purely because of a tightening of the discount rate for future service, due to economic growth expectations being revised downwards.

If a private school's participation in the TPS was treated like its participation in a multi-employer private sector DB scheme, or even the LGPS, there would likely be massive deficit payments on top and a large deficit figure shown on its financial statements.

Marcon

FrustratedTeacher wrote: »

The first communication we received on this proposed change stated that contracts will be terminated and re-issued in the event there is no agreement reached. We take it from this that we have no choice.

Of course you have a choice. You can choose not to sign the new contract and look elsewhere for a job.

Perhaps try for an agreement as suggested above: staff will be prepared to pay more into the TPS to make it 'affordable' for the school. BTW, I presume you've had a look at the school accounts to see exactly how they are faring financially? How are pupil numbers looking?

Johnnyboy11

Here's an update on the University USS pension scheme, which shows employee / employer contributions increasing over the next year to 11.4% / 24.2% respectively. And this is a funded scheme, with actual assets backing it, unlike the TPS! But it will give you an idea what the TPS is up against.

Thrugelmir

hyubh wrote: »

Erm, absolutely nothing to do dividend tax credits! Insofar as Gordon Brown has anything to do with it, it's in not getting serious about how costly the TPS actually is. Where they participate in it, private sector schools effectively free ride on the generosity of the taxpayer.

I agree, as that wasn't my point. It's the cost of funding the benefits that's the bottom line. Whatever the scheme is.

Apart from the fact the TPS is unfunded, also... problematic. Employers account for the TPS as if it were a DC scheme - i.e. on a cash contributions basis - and actual liabilities are somewhat obscured. The upcoming sharp increase in employer contributions is purely because of a tightening of the discount rate for future service, due to economic growth expectations being revised downwards.

Current employer contributions in the TPS include a 5% levy for a contribution towards pre 2015 benefits.

My current employer a quasi private sector company contributes 6% on a similar basis to another unfunded public sector scheme. Across the entire organisation's payroll that's a considerable burden to finance out of current operating income.

In the same way that Brown's policies hit DB schemes. Central bank fiscal policy post the GFC is having a considerable impact on the financing of pension schemes. Pulling a lever results in an unintended consequence elsewhere.

atush

I'd be asking thru th Union for a min of 20% employers contribution to the new DC pension.

Dox

Not sure what sort of help you envisage, because what's happening to you is what has happened to countless thousands of private sector employees in the UK. Your employer has concluded final salary provision is no longer something they can afford and they are therefore intending to move their employees to a newer, cheaper scheme.

There is one huge difference between you and the other hapless souls in this position. You can change jobs without changing career and have every chance, particularly if you join the state sector, of having a new employer who offers an 'open' final salary scheme: the TPS.

You moan about not having a choice, but you do. In your case, the choice is between staying in your current job and not being able to build up further benefits in the TPS; or moving to another school which offers TPS membership. Your call.

hyubh

Dox wrote: »

There is one huge difference between you and the other hapless souls in this position. You can change jobs without changing career and have every chance, particularly if you join the state sector, of having a new employer who offers an 'open' final salary scheme: the TPS.

You moan about not having a choice, but you do. In your case, the choice is between staying in your current job and not being able to build up further benefits in the TPS; or moving to another school which offers TPS membership. Your call.

Ditto the school (and ultimately parents paying the fees) of course - if enough good employees care enough about pension rights, then it's in the school's interests to ensure the total renumeration package it offers continues to include the excellent DB pension scheme (which, compared to a normal private sector entity, the school can offer much more cheaply even after the contribution hike).

hyubh

Thrugelmir wrote: »

Current employer contributions in the TPS include a 5% levy for a contribution towards pre 2015 benefits.

This is nothing like proper DB accounting. Look at the financial reports for a university that participates in both the TPS and LGPS to see what I mean - same will go for the (far fewer) instances of a private school that participates in the LGPS for historical reasons.

In the same way that Brown's policies hit DB schemes.

Presumably by Brown's policies, you don't mean the PPF?
The idea that the move on dividend tax credits was a big deal for DB pensions is a myth, though keep on saying it if it makes you feel better. (Same goes for older cliched tirades against Nigel Lawson.)

Central bank fiscal policy post the GFC is having a considerable impact on the financing of pension schemes. Pulling a lever results in an unintended consequence elsewhere.

So if it weren't for quantitative easing, private sector final salary schemes would still be open en masse...? That said, has nothing to do with the TPS.

daveyjp

There is due process to go through to change, your Union is the one that will negotiate.

No one likes being forced out of a job due to a change of T&Cs, but loyalty works both ways and you can always move on.

Dox

daveyjp wrote: »

No one likes being forced out of a job due to a change of T&Cs, but loyalty works both ways and you can always move on.

Hardly a question of 'force' - OP can choose whether or not to stay.