One in five teachers may have incorrect pension entitlements

The scandal, first reported in Schools Week, is the result of incorrect service records, which could affect a significant number of members in the Teachers' Pension Scheme.

Kate Atkinson, interim head of advice at the National Association of Head Teachers, explained the extent of the problem: “Approximately 20–30 per cent of our members have some missing service when they examine their service history.” 

According to experts, service records become incomplete when employers fail to send details to Teachers’ Pensions, the scheme administrator or even if contributions deducted from teachers’ pay have not been transferred to the scheme.

The problem came to light after teachers examined their service records and uncovered errors, but Kevin Courtney, joint general secretary, National Education Union, said: “The responsibility should not be for teachers to make sure their records are correct. Employers should get it right first time.”

If the missing service is from some time ago and they have no evidence of their payments to the TPS during this time, it can be an uphill struggle to get this service recognised, and sometimes impossible

Kate Atkinson, National Association of Head Teachers

He added: “The issue isn't a new one, the missing service periods can go back 20 years or more. The government has to make sure resources are available for Teachers' Pensions to conduct necessary audits and pursue complaints." The TPS is currently auditing service back to 2014 to check for gaps.

According to Mr Courtney, Teachers’ Pensions has taken steps to minimise future errors by reconciling contributions received and service credited on a monthly basis.

“The problem is dealing with errors which have arisen in the past where evidence such as payslips and payroll records may not be available,” he said.

The Association of School and College Leaders has also received "quite a few cases coming through of members with errors in their pension records”, added Jacques Szemalikowski, its conditions of employment specialist.

The concerns ranged “from missing periods of service to errors in annual allowance tax calculations. We have also received reports of errors in contributions and deductions”.

Gaps in service tend to arise when there has been a change of payroll provider, maternity leave, a move to part-time working, a change of employer or academisation. But Ms Atkinson noted: “We also see unexplained gaps in service where the reporting from payroll to TPS has failed for no particular reason.”  

She added: “The fault is often down to the payroll provider as they need to deduct the member’s contributions from salary and pass the service information across to TPS.  

Passing the buck to employers

Commenting on the lapses, a Department for Education spokesperson said: “Employers are responsible for providing correct information to the Teachers’ Pension Scheme.

“In the very limited circumstances it may no longer be possible for an employee to make contact with a previous employer, the TPS will be able to assist directly.

"The TPS follows a number of processes to validate the data submitted by employers, in order to proactively alert employers where the system suggests an error may have occurred. This includes scanning submitted data for gaps and comparing employment history with pension contribution amounts to ensure consistency.”

According to knowledge-sharing forum Teacher Tapp, 38 per cent of teachers have never checked their pension statement, and of those that have, 23 per cent have found errors. 

Ms Atkinson said: “If the missing service is from some time ago and they have no evidence of their payments to the TPS during this time, it can be an uphill struggle to get this service recognised, and sometimes impossible.”

Employers no longer keep payroll records indefinitely, due to General Data Protection Regulation compliance.

Ms Atkinson calculated: “If a member were to retire with a pensionable salary of £60,000 and had one year of missing service, this would mean their pension, if taken at age retirement from the 80th scheme, would be £750 less per annum than it should be.”

Julian Gravatt, deputy chief executive for policy, curriculum and funding at the Association of Colleges, said the discrepancies have arisen because of the “combined effect” of teachers not paying attention to payslips, the academisation of 7,000 schools away from local authority payrolls, and “a fairly low budget approach to administration”. Teachers’ Pensions is a division of Capita, and this year saw its contract extended after more than 20 years running the scheme.

Check and keep your payslip

Ms Atkinson advised that teachers should keep their payslips and check their service records at least once a year to ensure their service record is correct. 

But Penny Cogher, partner at Irwin Mitchell, said: “Employers and TPS should take the majority of responsibility for the errors found at TPS. Members are entitled to expect employers/administrators to operate TPS properly. It is difficult for members to fully understand the complexities of TPS and they should be able to expect that their pension benefits are correct as a starting point, rather than wrong.” 

There will be a huge administration exercise taking place at TPS to remedy the age discrimination in the scheme in accordance with the outcome of the recent government consultation. This is an added impetus to teachers to check their service history now.