Guidance

Teachers’ pension employer contribution grant (TPECG) 2024: methodology

Updated 23 October 2024

Applies to England

1. Introduction 

In October 2023, the Department for Education published the outcome of the valuation of the teachers’ pension scheme (TPS) based upon 2020 data.

The outcome confirmed a need to increase the employer contribution rate by 5 percentage points, to 28.6%, from 1 April 2024 to ensure that the scheme continues to meet present and future obligations.

HM Treasury committed to provide additional funding to cover the increase for employers centrally funded by the department for the 2024 to 2025 financial year.  Funding for future years will be determined at the next spending review.

In March 2024, we announced an additional £1.1 billion in the 2024 to 2025 financial year for mainstream schools, high needs settings, and local authorities with centrally employed teachers.

This guide explains how we will allocate the funding for mainstream schools (for the 5 to 16-year-old age range), high needs settings (including maintained special schools, special academies and free schools, hospital schools, non-maintained special schools, independent special schools and alternative provision (AP) made by pupil referral units and AP academies and free schools), and local authorities with centrally employed teachers in the 2024 to 2025 financial year. This funding will be allocated through the teachers’ pension employer contribution grant (TPECG) 2024.

We will aim to publish allocations for all settings (apart from centrally employed teachers), in spring 2024. In advance of that, we have published a ready reckoner for mainstream school and academy leaders to estimate what their TPECG 24 allocation will be for the 2024 to 2025 financial year.

2. Funding for increase in pension costs in 2024 to 2025 

For the 2024 to 2025 financial year, schools, non-maintained special schools and local authorities (on behalf of other high needs settings) will receive a separate grant to support the increase in the employer contribution rate to the TPS. Local authorities will also receive a grant for their centrally employed teachers (CETs), including those employed in local authority-based music hubs.  

Early years,16 to 19 education and further education settings will also receive additional funding. For early years settings, funding is already included in published core rates for 2024 to 2025. For 16 to 19 education and further education settings, we will distribute additional funding through existing teachers’ pension employer contribution grants. 

Non-local authority-based music hubs will receive an additional top-up to cover the increase in employer contributions for April to September 2024.

3. Eligibility for the grant 

This section sets out the eligibility criteria for the grant. 

3.1 Mainstream schools 

TPECG 24 will fund the following mainstream school providers, for the 5 to 16-year-old age range: 

• primary and secondary maintained schools 
• primary and secondary academies and free schools 
• all-through maintained schools 
• all-through academies and free schools 
• city technology colleges

3.2 High needs settings  

TPECG 24  will fund the following high needs settings: 

• maintained special schools 
• special academies and free schools 
• pupil referral units  
• alternative provision academies and free schools 
• hospital schools  
• non-maintained special schools (NMSS) 
• independent special schools

3.3 Centrally employed teachers (CETs) 

TPECG 24 will provide funding to local authorities in respect of teachers categorised as centrally employed on the schools workforce census 2023. Dependent on local definitions, it may cover the following teachers: 

• Peripatetic teachers, home tutors, and teachers who are employed by education authorities to provide education in institutions other than schools (for example hospitals, home tuition, assessment centres and pupil referral units). 

We expect that music hub CETs will be recorded on the schools workforce census.

4. Paying the grant 

4.1 Mainstream schools 

Local authority maintained mainstream schools and mainstream academies will receive allocations under the TPECG 24, covering the 2024 to 2025 financial year (April 2024 to March 2025). 

We will publish school level allocations of the mainstream schools’ portion of TPECG 24 for the 2024 to 2025 financial year in May 2024. 

We will pay funding directly to mainstream academies. 

Local authorities and academies will receive their payments for 2024 to 2025 in 2 tranches. Payments will be made in May 2024 for local authorities, and June 2024 for academies, to cover April 2024 to August 2024; and in October 2024 for local authorities, and November 2024 for academies, to cover September 2024 to March 2025.

New and growing schools will receive their first TPECG 2024 payment in spring 2024 and second in March 2025, as explained in the new and growing schools section. 

The funding will be incorporated into core budget allocations for 2025 to 2026. For primary, secondary and all-through schools, this will mean the funding being rolled into the schools national funding formula (NFF) for 2025 to 2026, as explained in the transition to the NFF in 2025 to 2026 section.

In recognition of the funding cycle for academies, which follows the academic year (rather than the financial year used for local authority maintained schools), academies will receive an additional allocation of the TPECG 24 to cover April to August 2025. This is the period in advance of the funding being rolled into academies’ core budget allocations through the NFF. This will be allocated using the same rates and pupil numbers as the 2024 to 2025 grant and will, therefore, represent five-twelfths of their 2024 to 2025 allocations.

4.2 High needs settings 

Local authorities will receive funding which they will then allocate to all providers in their area listed under the eligibility criteria in 3.2 above, except for non-maintained special schools, which will receive their allocations directly from the Education and Skills Funding Agency (ESFA).

Local authorities will receive 2 payments in the 2024 to 2025 financial year. We confirmed local authorities’ first allocations of TPECG 24 funding in May 2024. ESFA calculated allocations by multiplying the per place funding rate, with the relevant ACA (area cost adjustment applied), by the number of places reported to ESFA by April 2024.

For academies and free schools this is the 2024 to 2025 academic year places as published in March and used in the dedicated schools grant (DSG) deductions, and for maintained schools, the 2023 to 2024 places captured in local authorities section 251 returns and published in December 2023.

For independent special schools, this is based on the number of pupils with an education, health and care (EHC) plan or special educational needs (SEN) support for whom local authorities have commissioned places.

These are places in respect of pupils with SEN and EHC plans placed by the local authority in independent schools, as recorded by the authority on the January 2024 AP census.

The allocation will also specify an amount of funding specifically for hospital schools (and the equivalent academies). This first payment will be made to local authorities in June 2024.

Where applicable, local authorities will receive a second allocation of TPECG 24 funding in March 2025. This will be a top-up to account for updated data on places in maintained special schools, special academies and free schools, independent special schools (as described above), pupil referral units and alternative provision academies and free schools. ESFA will allocate any additional funding for new places in non-maintained special schools directly. ESFA calculates this funding by multiplying the per place funding rate (with the relevant ACA applied) by the number of additional places opened between the time of this announcement and March 2025.

For academies and free schools we will use the updated 2024 to 2025 places as at March 2025 that will also be used in the DSG. For maintained schools, we will use the 2024 to 2025 places from local authorities section 251 returns, due to be published later this year. For independent special schools, we will continue to use the January 2024 AP census data as the January 2025 data will not be available in time.

Local authorities will have flexibility in how they pass on the funding allocations to individual providers. This flexibility also applies in how they pass on the funding allocations for hospital schools (and the equivalent academies). These flexibilities recognise that the teachers’ increased pension costs faced by high needs settings vary considerably between individual settings, depending in part on the complexity of the pupil needs that they serve. Local authorities must however comply with the following requirements in setting their local methodologies for how they will pass on the additional funding to schools they currently maintain, academies they previously maintained and free schools located in their area.

Local authorities must: 

• pass on 100% of TPECG 24 funding to individual schools as listed in the eligibility section  
• ensure that all eligible schools receive a funding allocation through TPECG 24 in 2024 to 2025 
• have transparent criteria to distribute funding to individual schools, treating academies and maintained schools the same 
• consult with eligible schools before deciding their methodology for allocating TPECG 24 funding

Local authorities should seek to swiftly confirm the allocations for individual high needs settings to provide schools with the earliest possible certainty over their budgets. 

We will confirm in due course how the high needs element of the TPEGC 24 funding will continue to be provided in 2025 to 2026.

4.3 Centrally employed teachers 

Local authorities will receive one payment for their centrally employed teachers in 2024 to 2025. This will be at the same time as the second TPECG 24 payment for mainstream schools, in October 2024, following the release of the schools workforce census 2023 data.   

We will incorporate the grant into allocations for 2025 to 2026 as part of the central school services block (CSSB) NFF, as explained in the transition to the NFF in 2025 to 2026 section.

5. Funding rates

5.1 Mainstream schools

We have based the TPECG 24 funding rates on factors used in the teachers’ pay additional grant (TPAG):

• a basic per-pupil rate with different rates for primary, key stage 3 and key stage 4 
• a lump sum paid to all schools, regardless of pupil numbers 
• a per-pupil rate for pupils who are recorded as having been eligible for free school meals at any point in the last 6 years (FSM6), with different rates for primary and secondary pupils 

We apply an ACA to the funding rates in table 1 below because of geographical variation in labour costs. We have used the same ACAs as the schools national funding formula for 2024 to 2025 and we have published them in the area cost adjustment for national funding formula: technical note.

We will multiply the base funding rates in table 1 by the relevant ACA to calculate the school level allocations.

Table 1 

The base funding rates for 2024 to 2025 financial year are: 

• a basic per-pupil rate of £75 for primary pupils, including pupils in reception 
• a basic per-pupil rate of £106 for key stage 3 pupils 
• a basic per-pupil rate of £119 for key stage 4 pupils 
• a lump sum of £2,800 
• an FSM6 per-pupil rate of £65 per eligible primary pupil 
• an FSM6 per-pupil rate of £100 per eligible secondary pupil 

We have created a ready reckoner for mainstream schools and academies to estimate what their TPECG 24 allocation for 2024 to 2025 will be.

5.2 High needs settings  

The funding rate for 2024 to 2025 financial year is £595 per place for high needs settings apart from hospital schools (and the equivalent academies). The funding rate also applies at a per pupil level for those with an EHC plan or SEN support in independent special schools.  

We apply an ACA to the funding rate because of geographical variation in labour costs. We have used the same ACAs as for the high needs national funding formula for 2024 to 2025 and we have published them in the area cost adjustment for national funding formula: technical note. 

To account for additional costs faced by hospital schools (and their equivalent academies), local authorities will receive an uplift equivalent to 2% of the funding for hospital education as set out in 2024 to 2025 NFF allocations, as updated in the more recent 2024 to 2025 dedicated schools grant allocations.

5.3 Centrally employed teachers 

Teachers categorised as centrally employed on the schools workforce census 2023 will be funded on a per teacher basis, based a proportional split of the total quantum assigned to fund CETs.  

We cannot give the exact per-teacher rate for the TPECG 24, as the schools workforce census 2023 has not yet been published. If we used the 2022 data, the CET funding rate would be approximately £2,313. The exact figure using the 2023 data, will be confirmed later and may differ slightly. 

We apply an ACA to the funding rate because of geographical variation in labour costs. We will use the same ACAs as for the CSSB for 2024 to 2025 and we have published them in the area cost adjustment for national funding formula: technical note.

6. New and growing schools 

6.1 Mainstream schools that have opened in the past 7 years and are still adding year groups in the 2024 to 2025 academic year 

Schools that have opened in the past 7 years and are still adding year groups in the 2024 to 2025 academic year, and schools that opened between September 2023 and August 2024 (and are not recorded on the October 2023 census) will initially be funded based on the estimated pupil numbers as recorded in their respective local authority’s 2024 to 2025 APT. This data will be used for their first payment of the TPECG 24 in spring 2024. 

These schools’ funding allocations will be subject to adjustment to reflect actual pupil numbers in 2024 to 2025. For these ‘new and growing’ schools the second payment of the TPECG 24 will determine whether a retrospective adjustment is required to bring the initial funding allocations into line with the actual pupil numbers that the schools record in the October school census.

These schools will receive this second payment of TPECG 24 by March 2025, to allow sufficient time to process the autumn 2024 census data. If the ‘new and growing’ school is an academy, the third and final payment of the TPECG 24 (to cover the period April 2025 to August 2025) will also include this adjustment, again based on autumn 2024 (October) pupil numbers.

6.2 Mainstream schools opening in September 2024 

For mainstream schools that open in September 2024, we will confirm TPECG 24 allocations in February 2025. We will calculate their allocations using pupil number data from the October 2024 census. 

We will not publish indicative funding allocations for these schools because school leaders can estimate their funding levels using the published per pupil funding rates and/or ready reckoner.

6.3 New special and AP free schools that open between June 2024 and March 2025 

Funding for any new special and AP  free schools opening between July 2024 and February 2025 will be included in the second TPECG 24  allocation to be made to local authorities in March 2025.

Local authorities will be aware of those special and AP  free schools opening in their area and will wish to take them into account in consultations and decisions about the distribution of  TPECG 24 funding.

7. Transition to the NFF in 2025 to 2026 

From 2025 to 2026, the funding for the increase in pensions costs for mainstream schools will be paid through the schools NFF.  

We will ensure that the additional funding schools attract through the schools NFF is as close as possible to the funding they would have received if the funding was continuing as a separate grant, without adding significant complexity to the formula: 

In the schools NFF, we will add an amount to reflect the 2024 to 2025  TPECG 24 funding onto the basic per-pupil factor, the FSM6 factor, the lump sum, and the minimum per pupil funding levels.

Funding amounts reflecting the allocations through the TPECG 24 will also be added to schools’ baselines, for the calculation of the NFF funding floor. This follows the approach to “rolling in” that we took with the mainstream schools additional grant (MSAG) in the 2024 to 2025 schools NFF. 

We will confirm arrangements for the high needs element of the TPECG 24 funding for 2025 to 2026 in due course.  

In the CSSB NFF, we will roll in the funding for CETs through a per-pupil equivalent formula, similarly to how funding for the additional costs of copyright licences was treated in the CSSB for 2024 to 2025.

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