The Government Actuary’s Department released its Valuation Report on the Teachers’ Pension Scheme (TPS) on 26th October.
Its 78 pages contain some worrying data. In essence, employers will have to pay 28.6% of pensionable pay from April 2024 to March 2027. This is a rise of 5.8% on an already high rate of 22.8%.
The report shows that active scheme members have reduced over the past four years (albeit by a small number) however, the number of pensioners has increased by almost 7% over the same period. Hence the need to increase the contribution levels to keep up with costs.
Given the minimum rate for employers with a ‘standard’ automatic enrolment pension scheme is currently 3%, with no sign of any plan to increase it, this is an alarmingly high rate.
The TPS is a final salary scheme and thus a very different type of pension with guaranteed benefits at retirement, so from a technical perspective, it is unwise to compare the two directly.
However, for any independent school, this will add an unwelcome cost increase in the middle of a cost-of-living crisis. Also, this is an increased percentage of teachers’ salaries, which are themselves increasing.
If any of the above affects you and you’d like to discuss our opinion in further detail, please contact us on 01483 205890
source: GAD TPS Actuarial Valuation report 26 Oct 2023