FOI reveals hidden millions spent subsidising public school pensions

6 November 2010

A response to a Freedom of Information Act request from the Green Party [1] shows that millions of pounds of tax payers' money is being spent subsidising the pensions of teachers at England's most expensive public schools, including Eton, Harrow and Cheltenham.

An article published in today's Guardian [2] shows that eleven named institutions in the FOI response (including the schools attended by the Prime Minister, Chancellor, Deputy Prime Minister and Energy Secretary) have 1,639 members of staff in the scheme. The Green Party has calculated that the top 100 schools are looking at over £40 million in subsidy per annum.

Chair of the London Green Party, Noel Lynch, who initiated the request, said:

"It's scandalous that taxpayers are unknowingly paying towards the pensions of teachers at schools like Eton and Harrow. It will come as a surprise to a lot of people that these elite, private sector employers have access to the government's Teachers' Pension Scheme to the tune of over £40 million.

"It's unfair that these schools are exempted from the risks of stock market fluctuations while other similar sized organisations must suffer the consequences of a volatile market."

The Green Party believes the money should be ploughed into more urgent areas within the education budget such as building new local schools in deprived areas and employing more teachers to reduce class sizes.

Notes to editors

[1] FOI response:

Dear Mr Lynch

Thank you for your request for information, which was received on 4 October 2010. You requested information about Independent School membership of the Teachers' Pension Scheme (TPS). I have dealt with your request under the Freedom of Information Act 2000 ("the Act").

A copy of the information which can be disclosed is detailed below.

1. How many independent schools registered under section 161 of the 2002 Education Act have been accepted to the Teachers' Pension Scheme?
1,488

2. Can a list of all independent schools so registered be supplied?
The enclosure with this letter contains a full list.

3. From the latest available data, how many teachers are covered by the above registrations?
The total number of active TPS members covered by the above schools is 62, 349.

4. How many teachers from the following institutions are members of the Teachers' Pension Scheme?
- Eton College
- Harrow School
- Westminster School
- Millfield School
- Marlborough College
- King's School, Canterbury
- Winchester College
- Charterhouse School
- St Paul's School
- St Paul's Girls' School
- Cheltenham Ladies' College.

The total number of TPS members from these schools is 1,639.

The Department holds data regarding the actual TPS members by school, but this information is being withheld because the following exemption(s) apply to this information:

Section 40 (2) of the Freedom of Information Act - Personal information, which in this case relates to requests for the personal data of a third party (someone other than the applicant).

The Department considers that disclosure of TPS members by school could identify an individual's personal choice to join the TPS, due to the size of the school and the numbers of TPS members at each school. This consideration applies to all statistically small sample sizes.

The Department considers disclosure would breach one of the eight Data Protection Principles in the Data Protection Act 1998 - that disclosure of personal data relating to a third party will breach the fair processing principle as there was a legitimate expectation by the third party that this information would remain confidential. This is an absolute exemption.

The information supplied to you continues to be protected by copyright. You are free to use it for your own purposes, including for private study and non-commercial research, and for any other purpose authorised by an exception in current copyright law. Documents (except photographs) can be also used in the UK without requiring permission for the purposes of news reporting. Any other re-use, for example commercial publication, would require the permission of the copyright holder.

If you have any queries about this letter, please contact me. Please remember to quote the reference number above in any future communications.

If you are unhappy with the way your request has been handled, you should make a complaint to the Department by writing to me within two calendar months of the date of this letter. Your complaint will be considered by an independent review panel, who were not involved in the original consideration of your request.

If you are not content with the outcome of your complaint to the Department, you may then contact the Information Commissioner's Office.
Yours sincerely

Karen Cheeseman
TPS Contract Manager
Workforce Group
Karen.CHEESEMAN@education.gsi.gov.uk
www.education.gov.uk

[2] Link to the article in today's Guardian newspaper:

http://www.guardian.co.uk/education/2010/nov/06/teachers-pensions-private-schools

[3] Analysis of the FOI response by the London Federation of Green Parties:

The response names all the public schools that are admitted the Teachers' Pension Scheme.

Admittance to this scheme is important because employers participating in this scheme are only charged 14.1%(1) of pay for providing these final salary benefits. However this low employer contribution is only possible because of factors such as (a) the government's strong credit rating and (b) Treasury assumptions underpinning the calculation of the contribution rate. Schools would not be allowed by the Pension Regulator to make similarly optimistic assumptions if they ran their own pension scheme. Independent analysis suggests that the "true" contribution rate should be 10% higher to reflect these factors (2).

While the Green party would not accept this analysis fully (because it is a partisan attempt to make public sector pensions seem unaffordable) it is certainly the case that, as private institutions, schools such as Eton and Harrow would have to contribute at least 20% of pay for the same benefits provided by the Teachers' Pension Scheme.

The value of this subsidy is considerable.

The 11 named institutions in the FOI response (including the schools attended by the Prime Minister, Chancellor, Deputy Prime Minister and Energy Secretary) have 1,639 members of staff in the scheme (Eton, for example, has about 150 full time teaching staff - information from its website). At an average subsidy of 6% of pay and assuming average pay in these institutions of £45,000 (a rather conservative assumption) then the subsidy to just these 11 institutions every year is almost £4.5 million (£400,000+ per annum for an institution like Eton).

The top 100 schools are looking at over £40 million in subsidy per annum (a FOI could back that up if necessary).

On top of this, the risk and expense of running a pension scheme of this nature has been taken out of the hands of these institutions. Similar sized organisations are having great difficulty managing the investment risk associated with such schemes as stock markets fluctuate. These schools are given an exemption from these risks by the government for free. Likewise the schools don't have to go to the expense of funding trustee bodies to run the schemes or appointing actuaries or lawyers to advise on them. Similarly there is no pension protection fund levy where otherwise there would be one.

These factors greatly increase the hidden subsidy.

Finally, being able to offer the same pension provision that the state offers makes it easier for these schools to attract top performing staff from the state sector.

(1) see: http://www.teacherspensions.co.uk/employers/employers13.htm
(2) see: http://www.public-sector-pensions-commission.org.uk/wp-content/themes/pspc/images/Public-Sector-Pensions-Commission-Report.pdf (page 8)

 






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