Bedfordshire pools academy liabilities in bid to cut volatility

At a March 2022 meeting, the committee approved plans to form a single academy pool for all standalone academies and multi-academy trusts from April 1 2023.

These liabilities do not include those of teachers, whose pensions sit within the Teachers’ Pension Scheme. Rather, the pool will cover the pension liabilities of academy back-office staff.

The fund’s 2021 annual report acknowledged that academy employees are becoming an increasing share of its membership.

It’s a strongly held view by practitioners that having a pool around, in this case, the educational sector, will give much better stability

Doug McMurdo, Bedfordshire Pension Fund Committee

Academies’ legislation causes sector changes

The Academies Act 2010 transformed a substantial amount of schools in England into academies. They are employers in their own right within the Local Government Pension Scheme, and in Bedfordshire’s case are generally open to new recruits accessing the fund.

This act resulted in administering pension authorities becoming responsible for many more employers, with this figure increasing by more than four times in Bedfordshire, from approximately less than 50 to nearly 200 employers. 

As of March 31 2021, academy staff made up 24 per cent of the scheme’s 22,849-strong active membership.

These academies also have a wide variety in their employee numbers. Some primary schools, for example, may have a very small number of employees, while other academies who are subject to takeovers by multi-academy trusts have a much higher number of staff.

In its 2021 annual report, the fund said that it is keen to help academies within multi-academy trusts move to past and future service pooling, with all academies within a single trust paying the same pooled contribution rates and having the same funding levels.

At the committee’s March 2022 meeting, the fund’s chief officer, Julie McCabe, commented that it was likely that poorly performing academies would be merged into stronger ones.

The pooling of academies would have little impact on funding levels of other employers but would help to provide stability to these employers. 

At the same meeting, independent investment adviser Betty Carey observed that some academies had very few staff enrolled in the pension scheme. 

This means that individual staff members leaving or entering the scheme could prompt volatility in the funding levels for any given academy or multi-academy trust.

“There’s a lot of volatility within the academies and anyone that’s running a pension fund, whether that be the private sector or the public sector — you don’t want volatility, you want a bit of stability,” committee chair councillor Doug McMurdo told Pensions Expert.

“It’s a strongly held view by practitioners that having a pool around, in this case, the educational sector, will give much better stability.” 

Over three-quarters of academies in favour

At an October 2021 meeting, the committee agreed to consult with academy schools over a proposal to create a single academy pool, which would aim to share risks and contribution rates and provide more stable contribution rates. The proposal is understood to have potentially been under consideration for years.

The consultation ran for four weeks from January 9 to February 9 2022. The fund received 36 consultation responses representing 87 academies, with 78 per cent of academies in favour of the proposal.

The committee is considering proposals that will aim at keeping contributions affordable for the scheme and its employers, McMurdo said.

The fund will publish its funding strategy statement in the autumn that will include this proposal, which will go out to consultation.

“There shouldn’t be any specific risks outside the normal risks of any investment through a pension fund,” McMurdo added.