Information for schools converting to academies
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Converting to an Academy
Since the introduction of the Academies Act 2010, a large number of schools have converted to academy status and many schools continue to do so. It is important that any school considering a conversion is aware of the pension implications within the Local Government Pension Scheme (LGPS).
The LGPS is a statutory pension scheme, which has been amended to allow academies to participate in the scheme as a Scheduled Body.
When a school converts to an academy, all staff - teachers, teaching assistants, caterers, cleaners, care takers, etc, - become deemed employees of the academy. At the date of conversion to an academy, all support staff will continue to be eligible for the LGPS, in the same way they were immediately before the conversion date.
The academy must automatically enter into the Scheme all new support staff with a contract of employment for three months or more. All members who transfer under TUPE will have continuous pensionable service on the employment(s) that transfer.
Please contact Surrey Pension Fund at pension.fund@surreycc.gov.uk at the earliest opportunity to advise us that you are considering conversion.
Employer Pension Contribution Rate
Both the members and the employer pay contributions to the Surrey Pension Fund. The members' contributions are based upon the actual pensionable pay the member receives and the contribution bands are increased each year by the Consumer Price Index.
The employer pays a variable contribution rate set periodically by the fund actuary to ensure that there are sufficient assets to pay the liabilities due over time. Employer contribution rates will be reassessed at each formal valuation, which traditionally take place every three years. The last valuation was as at 31 March 2019.
It will be necessary for the school to obtain an Employers Pension Contribution Rate report from the Pension Fund actuary. It is important that this information is obtained as soon as a school considers its options to convert to academy status or to set up as a new school. This rate may be greater or less than the existing contribution rate.
This report from the actuary will determine how many assets the new academy should be credited with by calculating the total value of pension liabilities needed to transfer across. To enable our actuary to calculate this rate, the employer must complete and return a data capture spreadsheet for the staff involved.
The Actuary's costs for production of the Employers Pension Contribution Rate report, and the assessment are passed on to the academy.
Ongoing responsibilities
Both Surrey County Council as the Administering Authority and you as the employer have important roles in managing the scheme. Employers determine who can join, what pay is pensionable and what type of benefits are payable. They also pay over employer and employee contributions to the fund.
The academy is required to deduct and pay over the employers and employee's contributions by the 19th of each month following the month of deduction (22nd if remitted electronically). This should always be accompanied by the monthly schedule report to match the payment made.
The Administering Authority manages the fund, maintains member records, calculates and pays benefits. Both parties need to work closely together to ensure the scheme operates efficiently and effectively.
If an academy subsequently lets a contract, the transfer is covered by Fair Deal and the contractor should offer transferees the same public sector pension scheme. If you are looking to contract out any of your services e.g. catering or cleaning, which involves a TUPE of staff in the scheme, then it is important that you make the new contractor fully aware of the statutory requirement to protect employee's pensions.
Please also contact Surrey Pension Fund at the earliest opportunity to ensure that you do not delay the process. The cost of the Actuarial calculations and Legal fees for the outsourcing will be passed back to the academy outsourcing, the new contractor, or can be split between the academy and contractor.
Please note that actuary fees for providing the annual accounting reports (FRS102) are higher for the first year a report is required, and lower in subsequent years. If you require your report earlier than our standard timescale, additional charges may be incurred.
Responsibility for supplying accurate and timely data for scheme members lies with each employer in the LGPS. If you outsource your payroll provision to a third party, this does not remove your responsibility to supply accurate information. Therefore, checks should be made by you that all information supplied by your payroll provider is correct.