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Increase to employer contribution rates for the Teachers’ Pension Scheme likely, but timing uncertain

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NAHT specialist adviser Kate Atkinson shares an update on the employer contribution issue.

The current employer contribution rate for the Teachers' Pension Scheme (TPS) is 16.48 per cent. This was put in place on 1 September 2015, but it is expected to change following the outcome of the next actuarial valuation of the TPS. The results of the actuarial valuation were expected to be announced in March, but they have been delayed because of the HM Treasury’s late notification of 'central assumptions' that impact on the valuation of all public sector schemes. 

The primary purpose of a formal actuarial valuation is to set the employer contribution rate – because the HM Treasury has delayed the results of the valuation, the announcement of any change to the employer contribution rate has been similarly delayed.  

As part of the Teachers’ Pension Scheme Advisory Board (the board), NAHT has expressed concern about the delay in setting the employer contribution rate, in particular, the implications of such a delay on employers in determining budgets for the 2019/20 year; at a time when schools' budgets are at breaking point, an additional strain with little lead-in time for planning would have serious ramifications. 

Our concerns were echoed by all other union representatives, and as such, the board has requested that, as a minimum, any change in the employer contribution rate is implemented in September 2019 – not in April 2019 as originally proposed – to ensure employers have time to plan for changes and set budgets. If the outcome of the TPS valuation were delayed beyond the next few months, it is expected that the board would push for a delay beyond September 2019. 

This uncertainty is unhelpful. The board will continue to push for a delay in any increase in employer contributions as outlined above. However, there is no guarantee that the board’s recommendation will be successful, and as such, we understand that some school business leaders are taking the approach of including between a two to three per cent increase in employer contributions in budget plans for 2019/20 and for the three-year budget forecast for academies with such an increase starting in April 2019. 

We will continue to push for the delay through our participation on the board, and we will keep you updated on any movements in this area.

First published 09 July 2018