No, for once this isn’t about the Teachers’ Pension Fund, partly because there isn’t one: the government pays the difference between receipts paid into the scheme and the pensions payable to pensioners each year. There is an issue about why private schools are in the Scheme, but that may be for another post.

This post is about the report by UHY Hacker Young, the national accountancy group that was released earlier today. According to the authors, the Local Government Pension Scheme fund deficits around the country have increased between 75-100% on average over the last year, following Brexit-related market turbulence. This change affects all academies directly because nearly all non-teaching staff in schools are members of these schemes, unless they have chosen to opt out. As academies publish accounts each year, the scale of their deficit is easy to uncover

I raised concerns about growing deficits among academies in Oxfordshire earlier this year at a meeting of the county council, as they are the body that administers the scheme. Apparently, in 2013 the DfE gave some form of guarantee about under-writing the deficit. However, that seemingly has yet to be challenged, presumably because if an academy changes hands the deficit just passes to the new body running the school. I am not sure what has happened when a school closes completely as happened with at least one UTC in the West Midlands.

Of course, pension deficits are to some extent an a figure on a balance sheet of the type accountancy standards require, but most ordinary mortals pass over very quickly and nod sagely when it is explained to them at the meeting where the annual accounts are presented and discussed. However, with staff costs making up around 75% of the total costs of the average school, according to UHY Hacker Young, something will eventually have to be done to prevent these deficits overwhelming the education budget as a whole, so trustees might want to start asking questions when the accounts are presented to them later this term for sign-off.

As UHY Hacker Young explain:

“Pension deficits fluctuate each year according to market rates and other complex assumptions, however the trend over recent years, even before this latest increase, has been upwards. A deficit means the pension fund does not currently have sufficient assets to pay pensions that will fall due in the future to retired staff, so trustees are rightly questioning how the gap will be funded and where costs can be cut to plug the deficit.”

One option would be for the government to nationalise the fund rather than continue to allow a significant number of different local authority schemes to operate. This would, presumably, reduce the cost of administration, but some well-run schemes might see their returns reduce. However, schools would be secure in knowing that non-teaching staff were now being treated in the same manner as teachers. I assume if this somewhat drastic approach were to be chosen there would have to be a new Scheme, since taking away current assets from the market would be unthinkable.