The UK government has announced a plan to fully fund a 3.5 percent pay rise for teachers by redirecting savings generated from a reduction in employer pension contributions for school support staff. The decision, confirmed by Education Secretary Lucy Powell in September 2026, aims to address funding concerns and avert potential strike action from the National Education Union (NEU).

Under the new arrangement, schools will be able to reduce their employer contributions to the Local Government Pension Scheme (LGPS) by an average of 4.9 percent for support staff, which includes roles such as dinner ladies, caretakers, receptionists, and librarians. The scheme, a defined benefits pension plan separate from the Teachers’ Pension Scheme, is currently benefiting from a surplus, enabling this reduction. The savings, estimated at around £500 million, will be redirected to cover the full cost of the teachers’ pay increase.

While the government emphasizes that the pension benefits for support staff will not be reduced, the move has sparked significant backlash from the GMB union, which represents over 100,000 school support workers. Stacey Booth, a GMB national officer, described the decision as “disgusting,” accusing ministers of effectively taking money from the “poorest paid group in education” to fund teachers’ raises. The GMB argues that the pension savings should instead be used to improve pay and conditions for support staff, who are receiving a smaller pay rise of 3.3 percent compared to the teachers’ 3.5 percent increase.

The Department for Education and government sources maintain that the reduction in employer contributions reflects actuarial adjustments due to the scheme’s healthier-than-expected financial position and does not impact the pensions already accrued or the benefits members will receive. A government spokesperson stated that supporting the entire school workforce remains a priority and described the funding arrangement as a response to the NEU’s threat of strike action.

The NEU, whose membership is primarily teachers, welcomed the full funding for the pay raise, viewing it as a victory for school staff overall. Daniel Kebede, the NEU’s general secretary, criticized the GMB’s response as misleading and stressed that no support staff pensions have been cut. He highlighted that the pension savings helped avoid an unfunded pay award that could have risked thousands of support staff jobs.

Prior to this development, schools had anticipated covering part of the teachers’ pay rise from existing budgets, which raised fears of staff reductions and budget shortfalls. The Institute for Fiscal Studies noted that even with the pay increase and additional government funding, schools would face a small gap between rising costs and income this year, projecting a net funding improvement of just under one percent for the following year.

The announcement has reportedly caused some tension within the government, as the NEU’s public confirmation of the deal came before other stakeholders, including the GMB, were fully consulted. Although the Treasury had initially opposed fully funding the pay rise, it eventually approved the arrangement. Ministers also announced further planned increases of 3 percent for teacher pay in the subsequent year, funded by additional government support.

Overall, the plan seeks to balance the challenges of funding teacher pay rises while maintaining pension arrangements for support staff, though some unions remain critical of how the financial adjustments are being distributed across the school workforce.