Taunton School, a private school in Somerset, is insuring defined benefits in a buy-in of less than £10m. The scheme will now proceed to full buyout and wind up. The move comes as independent schools are bracing for headwinds under a possible Labour government. 

The deal with Aviva insures the benefits for 100 members and was advised by Broadstone, which was hired for services to take on and wind up the scheme. Legal advice was provided by Osborne Clarke. The transaction follows a lump sum paid by the sponsoring employer.  

Trustee and school governor Robert Aldrich said the school was keen to secure member benefits so it can focus on challenges facing the independent sector.  

“We appointed Broadstone to take us from a standing start to transaction and, with the assistance of Osborne Clarke, they have skilfully guided us through this transaction. We’re really pleased to have completed the deal with Aviva and look forward to working with them to transition member administration and wind the scheme up,” Aldrich added.  

Christopher Rice, head of trustee Services and deal lead said the trustees and the school wanted an end-to-end service in a busy market.   

He said: “We’re delighted to have secured the benefits for the Scheme’s members and look forward to supporting the trustees as we progress the scheme to buyout and wind-up.”  

Private schools are preparing for higher costs and lower demand as the Labour party, tipped to win the general election this week, has said it would start raising 20% VAT on private schools to improve state school funding. Some commentators are predicting that private schools will struggle to pass the entire cost on to parents, as fee increases tended to be above inflation in the past 20 years.    

Taunton School says it is “preparing for the potential imposition of VAT on school fees, despite several uncertainties surrounding this policy".  

Charging a termly fee of £8,245 for day pupils and £15,495 for boarders at senior school in 2024-25, the school is telling parents on its website that fees will not go up by 20% as it can “reclaim VAT on many expenses” and that “any fee increase due to VAT will be kept below 10%, excluding regular inflationary rises”.

It suggested that schools will not be able to absorb the VAT cost without passing some of it on: “We recognise the approaches of other schools may vary, but politely question the suggestion that VAT can be absorbed by a school entirely, with no loss of quality.” It also urged parents to watch out for pre-emptive fee increases.

The cost pressure could lead more private schools to rethink their pension arrangements. For independent schools that participate in the Teachers’ Pension Scheme, a further employer contribution hike is biting that could lead more to leave the public sector scheme and set up a defined contribution scheme instead. The TPS employer contribution rate increased by 5 percentage points to 28.68% from 1 April, having already shot up by 7 points in 2020. Several private schools planned a move to DC following the 2020 increase, prompting teacher strikes at the time.