The proposed reforms aim to streamline the method for transferring staff to a unified fund, rather than having them distributed across various councils according to their school placements.
The proposed reforms aim to streamline the method for transferring staff to a unified fund, rather than having them distributed across various councils according to their school placements.
The government is proposing reforms to support staff pensions within schools, aimed at facilitating a more centralized approach for academy trusts to consolidate all personnel under one fund.
Currently, employees within the local government pension scheme (LGPS) at an academy are automatically allocated to the fund of their respective local authority.
A consultation published this week by the Ministry of Housing, Communities and Local Government (MHCLG) highlights the challenges of having academies serviced by multiple administering authorities.
This situation can lead to inefficiencies and additional administrative costs for employers.
Academy trusts can currently seek a “direction” from the communities secretary to transfer a school under a different administering authority.
Introduction of New Criteria
The government presented the example of an academy located in South Shields whose trust operates out of Barnsley.
Locally, its pensions would be under the Tyne and Wear Pension Fund, but the trust has the option to request a transfer to the South Yorkshire Pension Authority.
New eligibility criteria are set to be established, potentially removing the necessity for government approval for most transfers, with a few exceptions.
A lack of clear criteria can lead to confusion for employers and administering authorities when preparing their cases for transfers.
Weighing Benefits Against Risks
While centralizing to one council may offer certain advantages to multi-academy trusts (MATs), it is essential to also consider the risks involved, particularly regarding the transfer of assets and member records, according to MHCLG.
New criteria will insist that MATs provide a clear and well-documented cost-benefit analysis to justify consolidation.
Furthermore, a “pre-existing relationship” with the desired administering authority is necessary.
All parties involved must consent to the transfer, and the receiving council needs the capacity to manage the transition effectively.
Government Approval Typically Not Required
The government has indicated a desire to restrict “contribution rate shopping,” where employers choose authorities solely based on lower contribution rates.
In cases where all criteria are satisfied, the government proposes to eliminate the need for secretary of state approval.
Most applications received are straightforward and align with the outlined criteria, leading to a belief that local decision-making is preferable.
This approach is aligned with the government’s push for increased devolution, promoting collaboration among local administering authorities and employers.
Intervention for Disagreements
Should disagreements arise among councils, ministers intend to intervene. The government will review potential disputes, which they anticipate will occur infrequently.
If the criteria are not met, applications will still require submission to the secretary of state.
Recent trends show that requests for directions often arise when an administering authority opposes a transfer.
The government has expressed support for applications that aim to consolidate within a single authority if the benefits of such a move outweigh the costs.
