The fall in employer contribution rates for the Teachers’ Pension Scheme makes establishing subsidiary firms for staff recruitment “harder to justify”, pensions experts have said, as unions argue that the reduced costs should prompt a pause in job cuts.
It was announced last week that employer contribution rates to the TPS would fall from a high of 28.68 per cent to 17.68 per cent from April 2027, which the Universities and Colleges Employers Association estimated could save universities £900 million.
But the news has come too late for some institutions, which have already made drastic changes to their staffing arrangements to account for the pensions costs.
Universities including Coventry, Chichester, Southampton Solent, Staffordshire and Winchester have moved staff on to subsidiary firms to take them off the TPS, offering bespoke schemes or the Universities Superannuation Scheme (USS) as an alternative, which has an employer contribution rate of 14.5 per cent.
John Ingoe, head of employer actuarial services at First Actuarial, said that the announcement “fundamentally changes the economics” for universities, and that institutions should think carefully before considering switching pensions.
