Annal Nayyar –blogs report that suggests State pension changes ‘leave academies facing £200m funding hole’

Academy schools face a £200m funding black hole as a result of changes to National Insurance contributions that form part of the government’s introduction of a single-tier state pension, an accountancy firm has warned.

UHY Hacker Young said today that the end of an NI opt-out – part of the introduction of a flat £144-a-week pension from 2016 – would typically cost secondary academies £100,000 a year, equivalent to the salaries of three teachers. Primary academies could lose out by as much as £50,000, equivalent to two posts.

The government’s reform will merge the fixed basic state pension and the contribution-based second state pension into a single payment. 

As part of the change, the opt-out that allows employers to not pay NI contributions into the second state pension for those enrolled in occupational schemes will be abolished. This will increase employer contributions, which Chancellor George Osborne has said public sector bodies will have to find from their existing budgets. The government has been warned such a policy would amount to a funding cut for services.

Analysing the impact on the almost 1,700 secondary academies and more than 1,450 primary academies, UHY Hacker Young said contributions would increase by 3.4% to 13.8% of salaries.

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