2020 valuation report: Changes in teachers’ pension scheme contributions 

As reported by NAHT, The Teachers’ Pension Scheme has seen adjustments in employer contributions and funding, with an increase in employer contribution rates and support for centrally funded employers

Every four years, the Government Actuary’s Department carries out a valuation of all unfunded public service pension schemes, including the Teachers’ Pension Scheme (TPS). The TPS 2020 Valuation Report was published last Friday (27 October 2023) and sets out the results of the actuarial valuation of the TPS as of 31 March 2020.

The two main outcomes are:

• An increased Employer Contribution Rate – where employer contributions will be increasing by 5% to 28.6% of pensionable pay next April 2024. A levy of 0.08% of pensionable pay is also payable by employers in order to meet the cost of administering the scheme
• No changes to individual employee contributions – this means members will continue to pay the same % into their pension scheme for 2023/24, with employee contributions staying the same until 1 April 2025.

As there is no breach of the cost control mechanism then there is no requirement for the secretary of state for education to consult on changes to the scheme.

Funding

For members managing the budget, the government confirmed back in March that it would fund the increased employer costs to support employers that are centrally funded. We expect that this will be in the form of a grant in 2024/25, as we’ve seen in previous years.

Considering the longer term, the government has confirmed that for future years, the costs will be covered within spending review considerations for 2025/26 onwards.