UK - Scheme funding problems were a major factor behind the government's decision to pump an extra £800m into the education sector.
The government boosted school funding by £2.5bn earlier this year but the department of education and skills said approximately £650m was needed to cover the rise in pension costs.
But it pointed out that pension costs would not rise in 2004-05, so the extra £800m could be spent “on other things”.
National Union of Teachers head of salary and superannuation Barry Fawcett explained that the pensions problems for schools started when the government made employers – rather than the Treasury – meet the costs.
“The intention was that, although schools would be paying more by way of the employer contributions, they wouldn’t be worse off because they would get more money from the government to pay that contribution.”
Fawcett said the idea was good in theory. But he added: “The government botched the whole exercise and a lot of schools ended up being short of money.”
The fiduciary problems being faced by schools was exacerbated by the increase in national insurance contributions in April.
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