Guidance

Teachers' pension scheme employer contribution grant: further education providers academic year 2024 to 2025

Updated 7 March 2024

Applies to England

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This publication is available at https://www.gov.uk/government/publications/teachers-pension-scheme-employer-contribution-grant-further-education-providers/teachers-pension-scheme-employer-contribution-grant-further-education-providers-academic-year-2024-to-2025

Introduction

This grant provides funding to further education (FE) providers to cover increased employer contributions to the teachers’ pension scheme (TPS). It covers the rate change from 16.4% to 23.6% in September 2019 and the increase to 28.6% in April 2024. The funding for this started in the 2019 to 2020 academic year. This guidance confirms the arrangements for the 2024 to 2025 academic year.

Eligibility 

The following types of FE providers participate in the TPS: 

  • general  FE colleges 
  • sixth-form colleges 
  • designated institutions (including the new designated institutions that form part of higher education (HE) provider group structures) 
  • special post-16 institutions

These providers will receive extra funding for increased employer contributions in each academic year covered by this grant if they receive Education and Skills Funding Agency (ESFA) funding for the same period and data from the relevant financial year shows they paid into the teachers’ pension scheme. 

We will treat colleges converting to academies before the start of the payment period as an academy, and they should refer to the guidance for schools. We will treat those converting during a payment period as an academy from the next appropriate payment point.

Calculating and making payments

2024 to 2025 academic year 

We  will use the 2022 to 2023 financial year audited payments made by providers to Capita for TPS to calculate funding. 

We will use  the employer pension contributions made at a rate of 23.6% to calculate: 

  • an adjusted annual total that would be the equivalent amount if the 16.4% rate had still applied, we will do this by dividing the total payments made by 23.6 and multiplying by 16.4 
  • an adjusted annual total that would be the equivalent amount if the 28.6% rate had already applied, we will do this by dividing the total payments made by 23.6 and multiplying by 28.6 

Based on these revised annual figures, we will fund the difference between the calculated TPS payments at the old rate (16.4%) and new rate (28.6%) uplifted by 6.8% and 3.7% to reflect estimated average increases in earnings in 2023 and 2024 respectively.

The estimated average increases in earnings are taken from the November 2023  economic and fiscal outlook published by the Office for Budget Responsibility (OBR).

We will pay the funding in 2 separate payments: 

  • September 2024 for the 8-month period from August 2024 to March 2025 - the amount will be 66.67% of the full-year figure 

  • April 2025 for the 4-month period from April to July 2025 - the amount will be 33.33% of the full-year figure

Where providers have merged, we combine the payments made and associate them with the new institution. 

Providers that receive 16 to 19 ESFA funding will receive confirmation of the payment amounts alongside their 16 to  19 funding allocation for academic year 2024 to 2025. We communicate funding amounts for all other providers by email.

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