Why my university is closing the TPS pension to new starters

Few decisions test university leadership more than changing colleagues’ pensions.

For a modern, forward-thinking university such as Birmingham City (BCU) to succeed in an ever-changing higher education landscape, we must ensure that we are not simply able to respond to today’s challenges but are also well placed to prosper in the years ahead.

That means making choices that strengthen our ability to invest in our academic mission, attract talented staff and students, and play an even greater role in the future of our region.

Pensions are deeply valued; they provide security, recognise long service and form an important part of the overall reward package universities offer. As we have seen at other institutions, any proposal to change pension arrangements will understandably generate concern, prompt difficult conversations and attract strong opinions.

No one takes such decisions lightly. They affect colleagues directly and touch on the trust that exists between an institution and its staff. That is precisely why staff demand an explanation of not only what is changing, but why.

From 2 November 2026, new academic appointments will be employed by our subsidiary company, BCU Support Services Ltd. This means they will no longer be eligible for enrolment on to the Teachers’ Pension Scheme (TPS); they will be eligible, instead, for membership of BCU’s defined contribution (DC) pension scheme, which has been the default scheme for most new professional services staff since August 2023.

Many may see this as a cost-cutting move. But it is less about cutting costs and more about ensuring stability.

Like every responsible organisation, universities must periodically review long-term commitments to ensure they continue to strike the right balance between supporting colleagues, attracting talented people and protecting the institution’s wider mission. But the TPS employer contributions are nationally determined and subject to significant volatility.

Recently, contribution rates have run at an unsustainable 28.68 per cent. And while the sharp reduction to 17.68 per cent from April 2027 is welcome, it also underlines the volatility and our lack of control over it. This limits our ability to plan future expenditure and invest strategically and with confidence. And at a time when the UK higher education landscape is increasingly unpredictable, this situation cannot be allowed to continue.

The TPS has its drawbacks for staff, too. With employee contribution rates ranging from 7.4 to 12 per cent, this can be a substantial barrier for lower-paid staff or those balancing other financial commitments. In fact, a proportion of BCU’s lower-paid staff currently opt out of the TPS.

With member contributions in our DC scheme being as low as 4 per cent and the employer contributing up to 16 per cent – significantly above the statutory minimum of 3 per cent – we can ensure that pensions are more affordable for our future staff and support them in their long-term savings.

This also gives our staff greater control over pension release. The TPS provides dependants’ benefits, of course, but only to a spouse, partner or eligible children. If a member doesn’t have one of these, ongoing benefits are not usually payable. In contrast, our DC scheme enables staff, in the event of their death, to pass their pension pot on to any nominated beneficiaries, whether it’s children, wider family members or others important to them.

Our DC scheme additionally provides staff with personal choice over their investments. Members can tailor their pension savings to match their goals, risk preferences and religious and ethical beliefs. They also have more freedom to design a retirement income that fits their lifestyle and long-term plans.

While this change is driven by the university’s need to make its own decisions around pension cost, it will also bring savings. At default contribution levels, employees would see a reduction in their pension contributions of up to 6 per cent, and the annual savings to the university would be about £1.9 million after five years.

As part of our commitment to widen participation and to be a better, more equitable and fairer university, we must ensure that these freed-up resources are used in ways that directly support the lives and futures of our students by investing in teaching, student support, research, facilities and opportunities for them.

At a time when the government is looking to universities to be accountable and strategic, we have a duty to balance the needs of current teams with those of future students and colleagues, while securing good retirement outcomes for our staff.

Ultimately, leadership is about taking difficult decisions – but doing so thoughtfully, fairly and with a clear sense of purpose. And success should be judged by the strength of the university we leave for those who come after us.

David Mba is vice-chancellor of Birmingham City University.