Employer NI hike threatens teachers’ pensions – Hymans Robertson

The rise in employer National Insurance contributions (NICs) from 13.8% to 15% will threaten independent schools’ ability to provide pensions for teachers, warns Hymans Robertson.

The rise in costs for schools is now four-fold, including an increased cost of pension schemes, school fees becoming subject to VAT and the removal of charitable business rate relief as well as the increased NICs. 

In April 2024, the Teachers’ Pension Scheme (TPS) and Scottish Teacher’s Pensions Scheme (STPS) costs increased by circa 20% for TPS and 11% for STPS.

Benefits earned by teachers remained unchanged; Hymans Robertson warned that schools are now paying more for their teachers to receive the same benefits.

The statistics suggested that many independent schools have started assessing their pension options.

For a teacher being paid £40,000 in England, the rising cost of the TPS and NI hike will result in an additional cost of £2,985 per teacher each year in April 2025 compared to costs in March 2024 – a significant increase.

This figure does not include any considerations around the VAT introduction and business rate change.

Hannah English, head of DC Corporate Consulting at Hymans Robertson, said: “Independent schools are facing a blend of financial pressure which will be implemented within the space of a year – an overwhelming cost to many schools.