ISM MUSIC JOURNAL MAY/JUNE 2022 | LEGAL & BUSINESS
Teachers’ Pension Scheme Stuart Darke and Nerys Owen look at the Teachers’ Pension Scheme for England and Wales, and how participants, including many music teachers, may be affected by recent changes to government funding for the scheme The ISM cannot give pensions advice, since it is a regulated activity, but our legal team regularly offers guidance and support in many other ways relating to pensions.
Above: Nerys Owen, Senior Legal Adviser
Above: Stuart Darke, ISM Director of Legal Services
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The Teachers’ Pension Scheme (TPS) for teachers in England and Wales is a defined benefit scheme, based on salary and service. Unlike a defined contribution scheme, where the final amount depends on the value of investments, placing all the risk as to the eventual size of the pension pot on the prospective pensioner, TPS participants receive a guaranteed pension based on their final and/or a career average salary. There are similar schemes for teachers in Scotland and Northern Ireland. Visiting music teachers (VMTs) and peris face a unique set of challenges in relation to the TPS, stemming from their variable hours and pay and the precarious nature of their working conditions. Problems include employers demanding that VMTs and peris enter into contracts of ‘self-employment’, shifting responsibility for pension provision entirely onto the teacher and away from the school; failure to supply accurate data to the TPS, resulting in prolonged under-payment that is difficult to track or quantify; the categorisation of VMTs as ‘tutors’ or ‘support staff’, so as to exclude them from the TPS altogether; and very low wages, often combined with working for multiple employers, resulting in inadequate retirement provision.
TPS in the independent sector Changes to the landscape of music teaching mean that VMTs and peris are disproportionately represented in the independent sector, where teachers are currently facing a particular threat, stemming from government changes to TPS funding. From September 2019, employer contribution rates under the TPS rose from 16.48% of salary to 23.68% following the 2016 TPS actuarial valuation. The government agreed to fund the full cost of these increased contributions for state schools, local authorities, music services and music hubs, leaving independent schools to fund the increase from their own resources. By January 2022, almost 300 independent schools (around one quarter of all participating independent schools) had either already left the TPS or had informed the Department for Education of their intention to withdraw, jeopardising the pension arrangements of thousands of teachers. Independent schools continue to consider whether to remain in the TPS especially as the fallout from the COVD-19 pandemic lingers and schools assess their finances. Some schools have told their teachers that if they are to remain in the TPS they will have to accept cuts to their current pay. Such schools have argued that they only have a finite pot of money and that the only way of remaining in the TPS is to lower pay levels for teachers. Naturally the ISM would not recommend that any music teacher offers to reduce their current pay as this will have an impact on their pension in the future, as well as meaning a pay cut during these hard financial times.
