Osborne’s ‘nasty’ surprise: schools face major hike in pensions costs, the Budget’s small print reveals

Chancellor plans to increase the pension contributions made by all public sector employers by £2 billion per year

Schools and colleges face a further increase in employer pension contributions that could cost the average secondary school £50,000 per year, analysis suggests.

The new cost, part of a plan to increase the contributions made by all public sector employers by £2 billion per year from 2019-20, was outlined in the small print of Chancellor George Osborne’s Budget yesterday.

Analysis by the Association of Colleges reveals that this could cause schools’ and colleges’ employer contributions to rise from their current level of 16.48 per cent to 18 per cent in 2019.

This would cost the average secondary school about £50,000 extra per year and the average primary school about £11,000 extra per year, the analysis suggests.

The announcement comes just months after a 2.38 per cent rise in schools’ and colleges’ employer pension contributions, which took effect in September.

‘Impact on school budgets’

“The impact on school and college budgets should not be ignored,” said Julian Gravatt, assistant chief executive of the Association of Colleges.

He said the measures would force schools and colleges to spend a rising share of their budgets on pension costs, which would make it harder to pay “competitive” salaries.

His analysis is based on an assumption that the cost of increased contributions would be shared between public sector employers in proportion to their current contributions.

He said the figures were subject to change, depending on Treasury calculations and the outcome of a valuation of the teachers’ pension scheme that will start next year.

Malcolm Trobe, interim general secretary of the Association of School and College Leaders, told TES that a rise in pension contributions from September had already put schools’ budgets under pressure.

“Any further increases would cause significant concern,” Mr Trobe said.

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