Are we alone?

[ailurophile]

How can pension contributions NOT be included in assessed income? Some people don't have pension plans because they can't afford them, and know that they will be living on just a state pension when they are older. But if pension contributions are going to be taken into account when assessing fees then those people might as well start a pension plan because they will have nothing to lose! In which case it will be CH that will be losing out because more people will be paying less fees!

“There is nothing so unfair as the equal treatment of unequal people.” (Thomas Jefferson)

Lonely mum, I am afraid that there are all sorts of anomalies in the methods used to calculate assessed income. You can equally say that not all parents can afford mortgage protection insurance, which is allowed, or qualify for housing benefit, which is not assessed as income.

CH are eager to assess every penny of your income, but unwilling to recognise the costs which are frequently involved in working – not only pension contributions, but also the costs of commuting to work, dressing appropriately, and paying union dues or professional subscriptions. We were told that our occupational pension contributions must be assessed as income "in fairness to the self-employed"; but the self-employed are able to claim substantial 'allowable' costs against their income before tax, and might anticipate being able to provide for retirement from the capital value of their business. If the playing field needs to be levelled, then let’s see it levelled up rather than down! - the assesment should allow all working parents a standard percentage of their income for pension contributions.

Dinahcat is right, it is 'Victorian' for the Foundation to expect working parents not to pay into a pension. There is surely a danger that if CH continue to set the contribution scale at such unrealistic levels they will end up with no fee income at all, since only those assessed as being unable to contribute anything will be able to send their children to the school!

[jhopgood]

There is surely a danger that if CH continue to set the contribution scale at such unrealistic levels they will end up with no fee income at all, since only those assessed as being unable to contribute anything will be able to send their children to the school!

That would be a return to the origins for CH. There are those who have argued that by receiving fee paying students, CH is betraying its purpose.
I am sure it is something that was discussed when the Council of Almoners placed a limit of 6% on the number of pupils whose parents pay full contribution.
A pretty difficult balancing act given the adverse financial climate.

[Mid A 15]

Also it is unreasonable to say that pension contributions should be included in assessed icome. A pension is not equivalent to doing with out holidays or cars and the like.

How can pension contributions NOT be included in assessed income? Some people don't have pension plans because they can't afford them, and know that they will be living on just a state pension when they are older. But if pension contributions are going to be taken into account when assessing fees then those people might as well start a pension plan because they will have nothing to lose! In which case it will be CH that will be losing out because more people will be paying less fees!

As an interested observer with no vested interest one way or the other I suggest that the problem is not Pension Contributions per se but COMPULSORY deductions from gross income of whatever type.

It is a fact that, in the Public Sector especially, some employees have little or no choice when it comes to the deduction of Pension contributions whereas those employed in the Private Sector, especially by small companies, or self employed people have to make their own VOLUNTARY pension provision.

The most equitable answer possibly is for The Foundation to adopt a more flexible approach when it comes to COMPULSORY deductions from gross salary of whatever type.

[lonelymom]

You can equally say that not all parents can afford mortgage protection insurance, which is allowed, or qualify for housing benefit, which is not assessed as income.

If the playing field needs to be levelled, then let’s see it levelled up rather than down! - the assesment should allow all working parents a standard percentage of their income for pension contributions.

I agree totally that the assessment should allow ALL working parents a percentage of their income for pension contributions. That is fair, whereas taking it into account for some, who will have a more comfortable retirement with a private pension, and not others, who will stuggle by on a state pension, is not fair.

I've never really understood why mortgage protection insurance is an allowable expense in the calculations anyway. Is life insurance, personal injury insurance etc allowed? I would assume though, that anyone qualifying for housing benefit would be on a fairly low income anyway, which would surely mean that they aren't paying any fees?

[englishangel]

Earlier today I wrote a long post about my family's circumstances (self-employed father) then deleted it as irrelevant but as someone else with no (current) axe to grind, hey guess what. life's not fair. I met a guy yesterday who has been made redundant twice in the last 4 months.

[ailurophile]

I would assume though, that anyone qualifying for housing benefit would be on a fairly low income anyway, which would surely mean that they aren't paying any fees?

No doubt you're right Lonelymom, but if you do the maths then anyone with children at CH will be on a fairly low income once the fees are paid!

Let's take two notional families: family A is a single parent , living on benefits, with an assessed income of < £7499. Quite rightly, they pay no fees regardless of how many children they have at CH, and are likely to qualify for free music lessons and help with 'extras'. And if they're struggling to afford a home, then any housing benefit they claim will not be assessed as additional income. Then take family B, two parents each earning the average salary of £25,000; after the deductions allowed by CH this leaves them with a joint assessed income of £30,000 - comparative riches! But think again: with two children in the school, their total assessed contribution will be £16,385, leaving them with a disposable income of £13,616. And perhaps family B have a mortgage which costs them more than the 12.5% of gross income allowed by the Foundation: theirs is actually closer to the national average of 20%, so they need an additional £3750 pa to meet their mortgage costs. Disposable income is now less than £10,000. And then let's assume that each wage earner has pension contributions deducted from their take home pay - say a further £3000 pa in total. Family B's disposable income is now about £7000. Out of this they have to meet the other costs involved in working which I have already mentioned, as well as the rising costs of food, fuel and other basics. And let's not forget that there are two adults (and two expensive teenagers!) in this home, whose living costs are necessarily going to be higher than those of the struggling single parent in family A. In the words of Mr Micawber, 'Result, misery!'.

We have referred the Foundation in our correspondence to the Joseph Rowntree Foundation report 'A Minimum Income Standard for Britain' http://www.minimumincomestandard.org/ which supports our contention that the assessed contribution is leaving families with an inadequate income to meet the basic cost of living, but we have not received any response to this point.

[lonelymom]

Good luck. I hope you get a response soon, before you have to resort to drastic measures!

[jtaylor]

I too am upset by this post.

As I see it, you agree to the financial assessment that's made when your child accepts a place at CH. You go into this agreement and commitment for your child for the following 7 years, and know what you're letting yourself in for financially.

If your financial circumstances change, then I would expect and hope that the Foundation would reassess this income on a regular basis as and when required, and there is a duty for parents to inform the Foundation of any change in circumstances, either positive or negative. It is a charitable organisation, and hence there's a moral duty for each parent to be paying the right amount as per their assessed income.
Given that the error was in the Foundation, and that the parents could not have been expected to have spotted it (i.e. the only people to "blame" are the Foundation) then the assessed amount should not be changed for existing parents.

Having said this, as John says the original aim of the school was to take homeless children off the streets of London - so if it returned to all non-fee-paying pupils, then it could be argued that that's how it should be. You would though lose the diverse range of people and backgrounds at the school, and I would suggest it would infinitely less positive an experience, as the children wouldn't gain from mixing with all sort of backgrounds of children.
I've heard suggestions that CH should move to a poverty-stricken areas of the world, where children need to be taken off the streets and education - but I can't quite see that happening somehow, or being self-sustainable.

I do sincerely hope that the Foundation will be reading this thread, and will either respond with a general comment, or maybe individually to those parents who have already raised these concerns with them.

I feel it would be wholely against the ethos of CH for a child to ever have to leave due to family financial circumstance, especially when it's created by an error made by the Foundation. The damage to the child would be significant I would have thought....

[jtaylor]

The .pdf giving income vs fees got me thinking.
If you look at the % of fees, it's understandably non-linear - there's a certain level of income required to live on (as a basic living wage) and hence as income increases you'd expect a larger proportion of that difference to be able to go to fees. (i.e. if I were earning £40k, then a £1k increase in salary should imply £1k further away from the minimum I need to live on)?

I've then showed the maths for what percentage of each increase between each row on the table is then consumed in fees.
e.g. from 30,000 to 35,000 is a £5,000 increase, and the fees go up by £3,172.
3,172/5,000 = 63% of the increase.
But you'll see from the numbers that this doesn't appear to follow any logical patern - it varies a lot, and isn't even on a general upward trend....
Any decent mathematical minds out there care to shed any light? Anyone know what the formula used by the Counting House is??

Maths.jpg (23.76 KiB) Viewed 3688 times

One other point - I've never quite understood the logic of having to pay anything extra for having a second child at the school. The Foundation should presumably be seeking to obtain a reasonable amount from every family, based on what they can afford. If a family can then afford to send a second child to the school, and thus pay an additional 50% on contributions, then they could in theory have afforded that when one child was at the school? If the fees for two children at the school are deemed to be fair for the family to pay, why is this not the same amount for one child (as presumably the family can afford that much money to be leaving the household)??
In other words - shouldn't two kids cost the same as one in terms of parental contribution, if both can show "need"?

[lonelymom]

Maybe they take into account that while the 2nd child is living at home there are costs involved such as food and transport to/from school. If they then go to CH with their sibling these costs are removed and therefore the family can afford to pay more. However, from September 2009 the 50% for the second sibling no longer stands, and the fee paid for the first child is taken into account in the contribution assessment instead.

[ailurophile]

Maybe they take into account that while the 2nd child is living at home there are costs involved such as food and transport to/from school. If they then go to CH with their sibling these costs are removed and therefore the family can afford to pay more. However, from September 2009 the 50% for the second sibling no longer stands, and the fee paid for the first child is taken into account in the contribution assessment instead.

Lonelymom, this argument would really only work if the school were to charge fees for a second or subsequent children at a flat rate, applicable to all families, based on the assumed cost of otherwise providing for that child at home. As it stands, the charge of 50% of the assessed contribution is heavily weighted against families on a higher income. Even the new assessment method which you describe (and by the way, where is this information available?) is unlikely to make the contribution 'affordable' for such families; slightly less unaffordable perhaps, but finding £3000 from income which you haven't got is not really much easier than finding £5000!

Julian, thank you for your interesting table. (I have already actually sent something similar to the Foundation, but they have not seen fit to comment on this either!). If you then multiply the increase in fees by 1.5 for families with two children at CH, it becomes clear that for 'better off' families an increase of £5000 in income could cause an increase in assessed fees of up to £5335. We must be in an almost unique position where we cannot afford to increase our income for fear of ending up worse off!

I worry that the methods used to calculate parental contributions do not encourage parents to work, or indeed to remain married. My son actually half-seriously suggested that we might consider divorce as a way of enabling us to afford for our children to complete their education at CH, and we're beginning to wonder whether he might have a point!

[lonelymom]

ailurophile, it was in the info sent to me when my daughter was offered a place at CH on Friday. I pm'd you the info on Friday but it's still showing as being in my outbox so you can't have read it yet. I would assume that if the info has been sent out to all the new parents it will make it's way onto the CH website soon - it's not there yet, I just checked, and it's still got the old 50% info.

[Fjgrogan]

Just a thought .............. I am curious to know whether in a two-parent family if both parents work but only one parent declares their income is their any legal way that the powers-that-be at CH can obtain that information? I know that bodies such as the Inland Revenue have a right of access, but would CH have the same right? Yes, I know it would be dishonest, but throughout history parents have been known to do desparate things to safeguard their children's welfare - or in this case, their education! I remember being in the situation where, I was unwilling to work whilst my children were still at home, yet once they were both at school and I was free to go out to work it was not worth my while financially because the resulting fee increase would have more than swallowed up my earnings. This is definitely not a new situation.

PS Even with the advantage of a CH education I cannot get my head round all these tables and figures!

[lonelymom]

Surely nobody would really do that? If the school found out they would exclude the pupil, wouldn't they? Or ask for backdated fees, which would make the problem even worse. I remember we had to complete financial forms which had to be signed in the presence of a solicitor, saying they were a true account of ALL income.

[jtaylor]

I would regard any falsifying of income information for assessment by CH as completely outrageous - equivalent of going to a soup kitchen to receive a free meal when you don't need it, or robbing a charity shop....