Following the consultation on the funding to cover increased employer contributions to the Teachers’ Pension Scheme (TPS), the DfE has announced that it will be providing additional funding to schools and FE providers to support these increased costs in 2019/2020.

This article breaks down the funding that schools and FE providers will receive.


The grant and Supplementary Fund for schools 


From September 2019, the employer contribution rate of the TPS will increase from 16.4 percent to 23.6 percent. The DfE will cover the total cost of the increase to schools – which is £848 million – from September 2019 to March 2020 through a grant and a Supplementary Fund.

The teachers’ pension employer contribution grant (TPECG) will be allocated using a per-pupil formula. Schools will be able to apply to the Supplementary Fund if their grant allocation falls short of their actual pension cost increase between September 2019 and March 2020 by more than 0.05 percent of their overall budget for this period – these schools will be reimbursed for costs above that threshold. The DfE will release more details about how to apply for the Supplementary Fund in the Autumn 2019.


Which schools are eligible for the grant?


The grant will be paid to the following mainstream institutions based on the number of pupils they have that are aged 2 to 19:

  • Maintained nursery schools
  • Primary, secondary and 16 to 19 maintained schools, academies and free schools 
  • All through maintained schools and academies

If a mainstream institution has fewer than 100 pupils, the grant will be allocated as if they had 100 pupils.

The grant will be paid to the following specialist institutions based on the number of places:

  • Maintained and non-maintained special schools
  • Special academies and free schools
  • PRUs
  • Alternative provision academies and free schools
  • Hospital schools

If a specialist institution has fewer than 40 places, the grant will be allocated as if they had 40 places.

Funding will be provided to LAs for pupils with EHC plans who are educated in independent settings. LAs will also be funded for their centrally-employed teachers.

Music education hubs are not eligible for the grant – they will have to apply directly to the DfE for funding.


How will the grant be paid to schools?


Maintained schools and academies will be paid using the 2019/2020 rates from September 2019 through to March 2020. Academies will also be paid using these rates for the period of April to August 2020 – eligible academies will also receive payments from the Supplementary Fund to cover this period.

The ESFA will pay the funding for maintained schools to LAs, who will be required to pay it to individual schools at the published rates. Academies and non-maintained special schools will receive the funding directly from the ESFA.

The ESFA will pay funding to LAs to distribute, according to local circumstances, for institutions who provide for children with high needs and for pupils with EHC plans who are educated in independent settings.


The rates for schools


Of the £848 million that will cover the TPS employer contribution increase, £22 million was set aside to provide money for the Supplementary Fund prior to dividing the funding between schools for the grant.

The total funding amount has been divided between primary, secondary and special schools, and LA centrally employed teachers, based on the size of the teacher wage bill for each sector. Funding has also been included for pupils with EHC plans who are educated in independent settings.

The DfE then divided the amount of funding for each sector between the number of pupils or places, to generate a per-pupil or per-place rate. An Area Cost Adjustment (ACA) has also been applied, which accounts for higher teacher wages in London.

The full list of rates for schools can be found here.


Which FE providers are eligible for funding?


The following types of FE providers are required to participate in the TPS:

  • General FE colleges
  • Sixth-form colleges
  • Designated institutions (including the new designated institutions that form part of HE provider group structures)
  • Specialist post-16 institutions
  • Adult community learning providers that are part of an LA

These institutions will receive additional funding for the increased employer contributions in 2019/2020 if they receive ESFA allocations for the same period. Sixth-form colleges that have become academies will be treated as academies – funding will be allocated to them based on the guidance for schools above.


How are grant funding calculations made for FE providers?


For colleges, designated and specialist institutions, the allocations will use the latest available audited payments made by providers to Capita for TPS, which relate to 2017/2018, and apply uplifts of 2.6 percent a year to reflect average increases in earnings since then.

Funding will be allocated to each college to cover the difference between their expenditure at the current rate and estimated expenditure at the new, higher rate.


How will the funding be paid to FE providers?


The DfE will make two separate payments – the first in September 2019, covering seven months, and the second in April 2020, covering four months. Where colleges have merged since 2017, the payments made will be combined and associated with the new institution.




The DfE will provide further detailed guidance on how the funding will be allocated to schools in the Autumn. Payments to schools will be made later in the Autumn.

Allocations for FE providers will be confirmed shortly so that colleges can factor this into their final budgets for 2019/2020.


What’s next?


  • Funding for maintained schools from April 2020, and further funding for all schools beyond July 2020, will be confirmed following the spending review.
  • We will keep you up-to-date with any more developments about how the funding will be allocated.




DfE (2019) ‘Pension grant methodology’ <> [Accessed: 10 April 2019]

DfE (2019) ‘Teachers’ pension scheme employer contribution grant: further education providers’ <> [Accessed: 10 April 2019]