19 January 2026
UCEA has today published a Position Paper: Financial Stability in Higher Education: Enabling a Sustainable Approach to Pension Provision, arguing that the excessive employer contribution rates paid by Higher Education Institutions (HEIs) into TPS are exacerbating the sector’s current financial pressures. The mandated use of TPS, which the paper argues offers poor value for money for HEIs, increases the risk of institutional failure and closure.
The paper also argues that:
Post-92 HEIs face a competitive disadvantage because of this mandated TPS participation*. UCEA analysis of HEIs in the same geographic area shows that post-92 institutions saw the monetary cost of their TPS (E&W) contributions increase by c.15% in the year to 31 July 2025, while their local pre-92 HEI saw a reduction in the monetary cost of their USS contributions of c.12%.
Only the HE sector is suffering the full consequences of TPS costs. FE colleges and schools in England and Wales receive increased funding through departmental budgets to specifically offset the additional costs of TPS. Independent schools, which are not mandated to offer TPS also have flexibility not to offer it to new joiners. Even this form of flexibility is not available to HEIs.
The cost of TPS is expensive for staff. A significant proportion of TPS (E&W) members in HE opt-out and, therefore, have no pension provision, no-ill health benefits and no life cover. Current TPS opt out rates for HEIs generally range from 10 to 15%, although some HEIs have seen opt out rates higher than this in recent years.**
UCEA welcomes the commitment in the UK Government’s Post-16 Education and Skills White Paper*** “… to better understand concerns within the post-1992 higher education sector about pension provision”. UCEA calls for regulatory change which would allow HE employers and their employees greater flexibility to participate in alternative schemes.
The paper has been written as part of UCEA’s ongoing advocacy**** for its member HEIs. Although the paper has been written to specifically address the challenges faced by HEIs in England and Wales, the principles and challenges equally apply to Scottish HEIs.
Raj Jethwa, UCEA Chief Executive said:
“Higher Education Institutions strive to be employers of choice and this includes offering competitive pensions as part of their overall reward package. But there is no logical reason why institutions should continue to be compelled to participate in the Teachers’ Pension Scheme when the costs are so high and the sector is being treated so unfairly.
“HE institutions in TPS face substantial financial challenges which have been exacerbated by the extraordinary increases in employer pension contributions. UCEA has lobbied successive Westminster Governments for financial support for these increased costs for our post-92 members, which has been made available to schools and FE colleges.
“Our paper argues for a sustainable approach to pensions, allowing HEIs flexibility to choose arrangements that deliver good value for money, for employers and their staff, while ensuring a competitive overall reward package.
“The paper has been submitted to the Baroness Smith, Minister of State for Skills and UCEA and our member HEIs look forward to engaging with her to develop a sustainable approach to pension provision in HE.”
The Financial Stability in Higher Education: Enabling a Sustainable Approach to Pension Provision and the letter to Baroness Smith can be found at www.ucea.ac.uk/our-work/pension/public-service/
Notes
* HEIs created under the 1992 Further and Higher Education Act ("post-92 institutions"), must participate in the TPS and the Local Government Pension Scheme (LGPS). TPS contribution costs are a significant contributor to the financial distress in the post-92 sector.
** The main reasons for staff opting out are affordability (the reason given by two-thirds of members opting out of TPS) or lack of flexibility for international staff who are not expecting to remain in the UK long term.
*** https://assets.publishing.service.gov.uk/media/69148532db01ecfcf96fc849/Post-16_Education_and_Skills_white_paper_Accessible_Version.pdf
**** UCEA has lobbied Westminster Governments since April 2019 - www.ucea.ac.uk/news-releases/10april19/ when the TPS (E&W) employer contribution rates first increased and again ahead of an further increase in April 2024 - www.ucea.ac.uk/news-releases/1april24/. For a fuller picture on UCEA’s more recent work in this area see - www.ucea.ac.uk/our-work/pension/public-service/
ENDS
For further UCEA information please contact Andy Fryer, Head of Communications and Membership (a.fryer@ucea.ac.uk), Marc Whittaker, Public Affairs and Events Manager (m.whittaker@ucea.ac.uk), Armelle Griffin, Communications Officer (a.griffin@ucea.ac.uk), or Ashleigh Rigden, Communications Officer (a.rigden@ucea.ac.uk)
UCEA has today published a Position Paper: Financial Stability in Higher Education: Enabling a Sustainable Approach to Pension Provision, arguing that the excessive employer contribution rates paid by Higher Education Institutions (HEIs) into TPS are exacerbating the sector’s current financial pressures. The mandated use of TPS, which the paper argues offers poor value for money for HEIs, increases the risk of institutional failure and closure.
The paper also argues that:
Post-92 HEIs face a competitive disadvantage because of this mandated TPS participation*. UCEA analysis of HEIs in the same geographic area shows that post-92 institutions saw the monetary cost of their TPS (E&W) contributions increase by c.15% in the year to 31 July 2025, while their local pre-92 HEI saw a reduction in the monetary cost of their USS contributions of c.12%.
Only the HE sector is suffering the full consequences of TPS costs. FE colleges and schools in England and Wales receive increased funding through departmental budgets to specifically offset the additional costs of TPS. Independent schools, which are not mandated to offer TPS also have flexibility not to offer it to new joiners. Even this form of flexibility is not available to HEIs.
The cost of TPS is expensive for staff. A significant proportion of TPS (E&W) members in HE opt-out and, therefore, have no pension provision, no-ill health benefits and no life cover. Current TPS opt out rates for HEIs generally range from 10 to 15%, although some HEIs have seen opt out rates higher than this in recent years.**
UCEA welcomes the commitment in the UK Government’s Post-16 Education and Skills White Paper*** “… to better understand concerns within the post-1992 higher education sector about pension provision”. UCEA calls for regulatory change which would allow HE employers and their employees greater flexibility to participate in alternative schemes.
The paper has been written as part of UCEA’s ongoing advocacy**** for its member HEIs. Although the paper has been written to specifically address the challenges faced by HEIs in England and Wales, the principles and challenges equally apply to Scottish HEIs.
Raj Jethwa, UCEA Chief Executive said:
“Higher Education Institutions strive to be employers of choice and this includes offering competitive pensions as part of their overall reward package. But there is no logical reason why institutions should continue to be compelled to participate in the Teachers’ Pension Scheme when the costs are so high and the sector is being treated so unfairly.
“HE institutions in TPS face substantial financial challenges which have been exacerbated by the extraordinary increases in employer pension contributions. UCEA has lobbied successive Westminster Governments for financial support for these increased costs for our post-92 members, which has been made available to schools and FE colleges.
“Our paper argues for a sustainable approach to pensions, allowing HEIs flexibility to choose arrangements that deliver good value for money, for employers and their staff, while ensuring a competitive overall reward package.
“The paper has been submitted to the Baroness Smith, Minister of State for Skills and UCEA and our member HEIs look forward to engaging with her to develop a sustainable approach to pension provision in HE.”
The Financial Stability in Higher Education: Enabling a Sustainable Approach to Pension Provision and the letter to Baroness Smith can be found at www.ucea.ac.uk/our-work/pension/public-service/
Notes
* HEIs created under the 1992 Further and Higher Education Act ("post-92 institutions"), must participate in the TPS and the Local Government Pension Scheme (LGPS). TPS contribution costs are a significant contributor to the financial distress in the post-92 sector.
** The main reasons for staff opting out are affordability (the reason given by two-thirds of members opting out of TPS) or lack of flexibility for international staff who are not expecting to remain in the UK long term.
*** https://assets.publishing.service.gov.uk/media/69148532db01ecfcf96fc849/Post-16_Education_and_Skills_white_paper_Accessible_Version.pdf
**** UCEA has lobbied Westminster Governments since April 2019 - www.ucea.ac.uk/news-releases/10april19/ when the TPS (E&W) employer contribution rates first increased and again ahead of an further increase in April 2024 - www.ucea.ac.uk/news-releases/1april24/. For a fuller picture on UCEA’s more recent work in this area see - www.ucea.ac.uk/our-work/pension/public-service/
ENDS
For further UCEA information please contact Andy Fryer, Head of Communications and Membership (a.fryer@ucea.ac.uk), Marc Whittaker, Public Affairs and Events Manager (m.whittaker@ucea.ac.uk), Armelle Griffin, Communications Officer (a.griffin@ucea.ac.uk), or Ashleigh Rigden, Communications Officer (a.rigden@ucea.ac.uk)
