Latest Announcements

Contributions Increase

From April the way contributions are calculated will be changed:

Contributions increase update for members 
Member FAQs
Contributions Increase Calculator
Contributions increase update for employers
Employers FAQs

Scheme Reform Announcement

On 20th December 2011, the Government has made a Written Ministerial Statement on reform of the Teachers’ Pension Scheme. The Statement and further information on the latest position with scheme reform can be found at

http://www.education.gov.uk/schools/careers/payandpensions
/b00198901/reform-of-the-teachers-pension-scheme

Members please see

www.teacherspensions.co.uk/members/members_reforms.htm

Employers please see

www.teacherspensions.co.uk/employers/employers_reforms.htm

Consultation on Proposed Contributions Increases

On 19 July 2011 the Chief Secretary to the Treasury (CST) set out the principles that would apply to increases in contributions for members of unfunded public service pension schemes, including the Teachers' Pension Scheme (TPS). On 28 July, the Department for Education issued a consultation which set out the proposals for how those principles will be applied to the TPS. The consultation closed on 20 October and the Department's response to the consultation is available at: http://www.education.gov.uk/consultations/index.cfm?
action=conResults&consultationId=1768&external=no&menu=3

Find out more about this proposal and what it means for scheme members, including a calculator to enable members to see what their new level of contribution will be.

Find out more about this proposal and what it means for you, as an employer.

HMRC introduced two pension allowances on 6 April 2006, one to restrict tax relief on pension growth and the other to restrict the benefits taken from a scheme, before giving rise to additional tax charges.

Both of these allowances were reduced in the Finance Act 2011. The changes to these pension allowances are being made by the Government to ensure that pensions tax relief remains fair and affordable. The Changes are set out below:

• The annual allowance (AA) is a limit of the tax free growth or input you can have in all registered pension schemes in a tax year. If the AA is exceeded, this gives rise to an AA charge. The AA for the tax year 2010/11 was £255,000 but this has now reduced to £50,000 for the tax year 2011/12. There is, however, the potential to utilise unused AA from the previous 3 years.
• The lifetime allowance (LTA) is the maximum amount you can take in pension benefits during your lifetime from all pension schemes before an additional tax charge is incurred. If the LTA is exceeded, you will be subject to the LTA charge. The LTA for the tax year 2011/12 is £1,800,000, but will reduce to £1,500,000 in the tax year 2012/13.

HMRC has enabled members who may be adversely affected by the reduction in the LTA to apply for a new type of transitional protection, known as Fixed Protection. You will only be able to apply for Fixed Protection from HMRC until 5 April 2012. Please note there are stringent conditions which apply to Fixed Protection and consequently we would recommend you seek independent financial advice.

Further information including Q & A's can be found in the link below and in Members FAQs:

Letter to members - Q & A's on reduction in annual and lifetime allowance (PDF)

New pension estimator available

We have produced a calculator that provides a rough estimate of how the proposed scheme reforms might affect your pension benefits. You can access this calculator at www.teacherspensions.co.uk/calculator/calculator.html

The calculator does not provide a formal statement of your pension entitlements – it is provided to give a rough estimate only and the Teachers’ Pension Scheme cannot accept responsibility for the accuracy of results from this or indeed any other calculator. Another calculator may produce a different result.

Please note that the final terms of the scheme reforms are still being discussed and may change.
The final reformed scheme will not come into effect until 1st April 2015.

If you need to find out how much pension you have earned to date, you should register for My Pension Online.

Retirement conditions for Actuarially Adjusted Benefits (often referred to as Actuarially Reduced Benefits [ARB]), Age Retirement and Phased Retirement

Questions and answers have been added to the Members FAQs and Employers FAQs to clarify the retirement conditions for ARB Retirement, Age Retirement and Phased Retirement.

Consultation on amendments to the TPS to reflect Workplace Pension Reform, changes to pension tax relief and Miscellaneous Amendments

Please find below a further letter regarding the above.

• Further Letter to Consultees re: Consultation on amendments to the TPS to reflect Workplace Pension Reform, changes to pension tax relief and Miscellaneous Amendments (PDF, 1.98MB)

Scheme reform update 02/11/2011

Today, the Government made an announcement about its proposals for reform of public service pensions.  This leaflet provides information on proposed reforms to Teachers’ Pensions – why reform is necessary, what is proposed to change, what will stay the same and how it will affect members. More information on pension reform can be found on the DfE website at www.education.gov.uk/pensions.

To find out how this proposal would affect members, please visit www.teacherspensions.co.uk/members/members_reforms.htm

To find out how this proposal would affect employers, please visit www.teacherspensions.co.uk/employers/employers_reforms.htm

EMBARGO: TRANSFER VALUE CALCULATIONS

HM Treasury has issued guidance on discount rates to be used in calculating Cash Equivalent Transfer Values (CETVs).

This guidance is now being considered by the DfE in conjunction with the Scheme Actuary.

Until such time as the Actuary is able to advise the effects of the revised guidance on factors in use for calculating CETVs, we have been instructed by the DfE to suspend calculation of CETVs with immediate effect.

Please note calculations for Pensions On Divorce are suspended until further notice.

Club transfers will continue for the present, as they are subject to different factors.

Consultation on amendments to the TPS to reflect Workplace Pension Reform, changes to pension tax relief and Miscellaneous Amendments

Please find below the letter regarding a consultation on amendments to the Teachers' Pensions Regulations 2010.

• Letter to Consultees re: Consultation on amendments to the TPS to reflect Workplace Pension Reform, changes to pension tax relief and Miscellaneous Amendments (PDF, 2.21MB)

Contribution Increase Calculator
There is a new online calculator available to help scheme members understand how the proposed rates will affect their pension contributions. Please click on the above link to access the calculator.

Scheme Reform Update

The Government set up the Independent Public Service Pensions Commission (IPSPC) chaired by Lord Hutton to make recommendations on how such pensions can be made sustainable and affordable, whilst remaining fair to the workforce and other taxpayers.  

The IPSPC published its interim report on pension reform in October 2010.  That report recommended that increased longevity and the imbalance between employer and employee contributions are strong reasons to make short-term changes to pension contributions pending a more fundamental re-design of the schemes. 

The Government has accepted that there is a rationale for increasing member contributions to ensure a fairer distribution of costs between taxpayers and members and is therefore proposing to increase member contribution rates from April 2012.

The IPSPC published its final report on pension reform in March 2011.  The Government has accepted the recommendations in that report as a basis for consultation with public sector workers and trade unions.
For further information on the IPSPC, please click here.

The Chief Secretary to the Treasury provided an update to Parliament on 19 July on public sector pensions and details are available at http://www.hm-treasury.gov.uk/press_83_11.htm

Find out more about this proposal and what it means for scheme members.

Find out more about this proposal and what means for you, as an employer.

Actuarially Adjusted Benefits - Change in factors for members with a payable date on or after 1 July 2011

Following the budget announcement on 23 March 2011 about the change in the discount rate (see the announcement dated 1 April 2011), the factors for early retirement (commonly referred to as Actuarially Reduced Benefits) change with effect from 1 July 2011. Members with a payable date on or after 1 July 2011 will have benefits calculated on these revised factors (PDF, 30Kb).

The effect of the new factors is that the reduction in the early retirement pension (and lump sum if applicable) will be marginally less as far as the main scheme is concerned.

Please be aware that different factors will apply in respect of Additional Pension, depending on whether the Additional Pension election was made on or before 22 June 2010 or after 22 June 2010. This is to take account of the change in the basis of indexation announced by the Chancellor in June 2010 and is in accordance with the Teachers' Pensions (Miscellaneous Amendments) Regulations 2011.

Transfer values, Pensions On Divorce and other factors

It should also be noted that other factors are also being reviewed on account of the change in the discount rate. The review of factors could affect transfers of benefits into and out of the TPS, and pensions on divorce calculations. Other factors used by the TPS, including those used for converting small pensions coming into payment into a lump sum (subject to HM Revenue & Customs conditions), are also being reviewed. Further developments when known will be posted on the TPS website.

Annual Allowance (AA) Calculator

TP has developed an Annual Allowance (AA) calculator to assist employers and members in investigating the effect of the AA of £50,000 for tax years commencing 2011/12.  Any growth in excess of the AA and the balance of any AA carried forward from the previous three tax years will result in an AA charge.  The calculator will indicate whether the person has exceeded the AA (red), is within 10% of the AA (amber) or within 90% of the AA (green).

At the time of writing, the relevant legislation to implement the AA has not yet been enacted, but the Finance Bill 2011 is expected to become law shortly.

This tool is for estimating purposes only and should not be relied upon.  You should contact an independent financial or tax advisor if you believe you are affected.

For more detailed guidance, you can also refer to the HM Revenue and Customs (HMRC) website. 

A comprehensive Q&A on the AA is set out below:
http://www.hmrc.gov.uk/pensionschemes/annual-allowance/reduced.htm

The Budget on 23 March 2011

Details of the Chancellor's budget presented on 23 March 2011 can be found on the link below:
HM Treasury 2011 Budget document (PDF, 900KB)

We would particularly draw your attention to the paragraphs 2.11 to 2.15 under the heading of “Pay and pensions”.

This includes the government's response to Lord Hutton’s report in respect of public service pensions. The Government has accepted Lord Hutton’s recommendations as a basis for consultation with public sector workers, member unions, employers and others.  The Government will set out proposals in the autumn that are affordable, sustainable and fair to both the public sector workforce and to other taxpayers. No decisions have therefore been taken yet on any changes to the Teachers’ Pension Scheme (TPS). Lord Hutton has recommended that changes to public service pension provision can be introduced before the end of this Parliament.

The Government remains committed to the protection of accrued pension rights. Lord Hutton recommended that the pension promises that have been accrued by scheme members should be honoured, and additionally that the rights individuals have built up to date should remain linked to their final salary until the point they leave the new scheme, or retire. Similarly the linking of Normal Pension Age (NPA) to the State Pension Age would apply to future service only, so benefits built up to date would still be payable at the current NPA in those schemes.

Lord Hutton has recommended that a new career average salary scheme be set up for future pension accrual, but has left it to the Government to decide on the design, in consultation with trades unions and other representative groups.

Paragraph 2.13 of the Treasury document refers to the change in the discount rate.  Following a public consultation, the Government has decided that the appropriate discount rate for calculating unfunded public service pension contribution rates should be based on the long term expectations of GDP growth. A discount rate of 3% above the Consumer Prices Index will therefore be adopted.

The Treasury is reviewing the discount rate used to calculate Cash Equivalent Transfer Values (CETVs) in light of changes to the discount rate. Individuals seeking the calculation of a CETV should be aware that the discount rate used in those calculations is being reviewed and may change, subject to actuarial advice. This could affect transfers of benefits into and out of the TPS, and pensions on divorce calculations. Other factors used by the TPS may also be affected.  Further information on these issues will appear on the TPS website in due course.

The Treasury document also covers a consultation on the possible reform of the state pension system, including the option of a regular independent review of the implications of longevity changes.

Lord Hutton Review of Public Sector Pensions

The Chancellor, on behalf of the Government, has set up a commission (the Independent Public Service Pensions Commission), chaired by Lord John Hutton, to review public service pensions (including those provided by the TPS). The Commission published its final report on 10 March 2011. In the Budget, the Government accepted Lord Hutton’s recommendations as the basis for consultation with public sector workers, unions and others. The Government will set out proposals in the autumn that are affordable, sustainable and fair to both the public sector workforce and to other taxpayers. No decisions have been made yet on any changes to the TPS. Details of the final report and its recommendations can be found on HM Treasury’s website.

With regard to any industrial action taken by members of the TPS, this is covered on the employers section of the website here.

For those with regular full-time or part-time contracts, or irregular contracts covering the relevant period, the individual will not accrue reckonable service on each strike day, but the employer should record the strike days as "days out" on the member's service record within an overall period of pensionable employment.

This means that:

• The strike days will not be recorded as reckonable and therefore will not be used in the calculation of service for pension purposes at retirement;
• Members over Normal Pension Age will not become entitled to retirement benefits, provided the employer records the service is recorded as "days out" rather than a service break; and
• Members would remain covered for the "in-service" death grant if they died having been out on strike at the date of death, again provided the employer records the service as "days out" rather than a service break.

Please be aware there is no provision in the TPS for members to buy back strike days.

Change to the Lifetime Allowance from 6 April 2012

Important announcement about the Lifetime Allowance (LTA)
Please click on the link above for further details.

On 22 June 2010, the chancellor announced that the Lifetime Allowance (LTA) will be reduced from £1.8 million to £1.5 million with effect from 6 April 2012.

The LTA valuation factor will continue to be 20 and the maximum retirement lump sum that a member can take from a pension scheme will remain at 25% of the standard LTA.

Change to the Annual Allowance (AA) from 6 April 2011

Important announcement about the Annual Allowance (AA)
Please click on the link above for further details.

Following a period of consultation, HM Treasury announced that the AA is to be reduced to £50,000 for the tax year commencing 6 April 2011.  There are to be some changes to the way in which the AA is calculated.

Independent Public Service Pensions Commission (IPSPC)

Lord Hutton published his final report on the future of public sector pensions on 10 March 2011. This independent report contains his final recommendations to the Government following wide consultation with stakeholders including both experts in pensions and those representing the public sector workforce. 

The main recommendations include:

• The Government should continue to provide a form of defined benefit pension as a core design for future public service pension provision;
• Members of the current defined benefit schemes should be moved to new Career Average Revalued Earnings (CARE) schemes for future service;

• Members’ accrued rights must be protected; and

• The Normal Pension Age of members in the new Schemes should increase in line with their State Pension Age.

In an initial response the Government has thanked Lord Hutton and the staff of the Commission for producing the detailed and complex report. The Government has stated that they will now give careful consideration to his recommendations over the structure of future public sector pension provision and respond in due course.

The Government has explained that it is premature to comment on any specific aspect of the report at this stage but has outlined a clear commitment that the implementation of any future reforms will be done through engagement with people working in the public sector, trades unions and all other relevant stakeholders. 
  
No changes have been made to the TPS as a result of the publication of Lord Hutton’s report. We will inform all members of the TPS about any future changes which may affect them and will provide further updates on the Government’s response when it is available on this website.

You can see a full copy of Lord Hutton's final report by clicking on the link below:

http://www.hm-treasury.gov.uk/indreview_johnhutton_pensions.htm

(Draft) Teachers' Pensions (Miscellaneous Amendments) Regulations 2011

Please find below letter re: a consultation on the (Draft) Teachers' Pensions (Miscellaneous Amendments) Regulations 2011.

• Letter to Consultees re: (Draft) Teachers' Pensions (Miscellaneous Amendments) Regulations 2011 (PDF, 2721KB)

Teachers' Pensions Regulations 2010 - Consultation on amendments

Please find below the letter regarding a consultation on amendments to the Teachers' Pensions Regulations 2010.

• Letter to Consultees re: amendments to Teachers' Pensions Regulations 2010 02/12/2010 (PDF, 2025KB)

Note from the Department for Education

Teachers’ Pension Scheme (England and Wales) - Spending review announcements

In his Spending Review announcements, the Chancellor has accepted the conclusions in the interim Report by the Independent Public Service Pensions Commission (IPSPC) led by Lord Hutton of Furness (published on 7 October).

The IPSPC interim report highlights the importance of providing good quality pensions to public servants, rejects a race to the bottom in pension provision, but concludes that there is a clear rationale for public servants to make a greater contribution if their pensions are to remain fair to taxpayers and employees, and affordable for the country.

In the spending review, the Chancellor’s response to the Commission’s interim recommendations included:

• a commitment to continue with a form of defined benefit pension;
• implement progressive changes to the level of employee contributions that lead to an additional saving across public service pension schemes of £1.8 billion a year by 2014-15, equivalent to three percentage points on average, to be phased in from April 2012;
• exempt the armed forces from this increase in employee contributions;
• await Lord Hutton’s final recommendation before determining the nature of future defined benefit and the precise level of progressive contribution required;
• carry out a public consultation on the discount rate used to set contribution rates in the public service pension schemes; and
• launch a consultation on the Fair Deal policy, which Lord Hutton noted can create a barrier to the plurality of public service provision and make it more difficult to achieve innovation, to report by summer 2011 informed by Lord Hutton’s final recommendations on structural reform.

Next steps

The Department for Education, as scheme managers, will be engaging with teacher unions and employer representatives to discuss the full implications of these announcements for the Teachers' Pension Scheme.

Valuation of the Teachers' Pension Scheme

The Teachers' Pension Scheme is subject to a valuation by the scheme actuary every four years. The Government Actuary’s Department has been working on the current valuation (as at 31 March 2008) but this has been suspended pending the final report by the IPSPC and full consideration of the Spending Review announcements.

In Service Teachers - Apply on-line for your Age Retirement Benefits.

The retirement application form to be completed by teachers who are “in pensionable service" upon reaching normal retirement age is the latest addition to the forms that can be completed and submitted on-line.  Once completed, the application will be forwarded to your Employer via the Secure Transfer Utility (STU) for completion by them.

The application form can be accessed via My Pension Online (alongside the other electronic forms), where registration is a straight forward process.

Update on Transfers Embargo

This updates the announcement made on 27 August 2010 about the transfer of pension rights in and out of the Teachers’ Pension Scheme (TPS) and Pension-Sharing requests.

The calculation of transfer values (other than those being paid across the public service transfer club) was suspended at the beginning of July following the announcement in the June budget that public service pensions will, in future, be uprated by the Consumer Price Index (CPI) instead of the Retail Price Index (RPI). This affected the economic assumptions that form the basis of transfer values and the calculation of service credits into the TPS. The Department for Education has had to arrange for the Scheme actuary to provide new factors for use in the transfer calculations.

Transfers-out

Most of the new factors are now available and we are currently in the process of updating our computer systems. Once systems have been updated, there will be a further delay before we are in a position to calculate your transfer value estimate because, as you will appreciate, a significant number of requests have built up since the embargo was announced. On the grounds of fairness, we intend to handle the requests in date order. We would like to assure you however, that we will do everything that we can to minimise any further delays.

Transfers-in and pension-sharing

We have not received the factors for transfers-in to the TPS and for pension-sharing. We hope to receive details from the DfE and the Scheme actuary in the near future.

The latest version on the TP Financial Note is now available (dated Sept 2010):

TP Financial Note - September 2010

EMBARGO: Non Club Transfers and Pensions on Divorce calculations

As part of the package of changes announced in the Chancellor’s emergency budget on the 22 June 2010, the basis for revaluing pension increases in public sector pension schemes is to change from the Retail Prices Index to the Consumer Prices Index.  This will affect the indexation of future benefits in deferment and in payment, with a consequent potential impact on cash equivalent transfer values (CETVs).

Following instruction from the scheme managers, the Department for Education (DfE), all CETV calculations regarding Pensions on Divorce and all Non-Club (non public sector) transfers into and out of the TPS have been suspended, pending further instruction.  The DfE are consulting with HM Treasury, the Scheme Actuary and other offices across government, with a view to a further announcement on the way forward in due course.

Consolidation

TP UPDATE – Summer 2010
The Teachers' Pensions Regulations 2010 coming into force on 1 September 2010

Background
The Teachers’ Pension Scheme (TPS) is a statutory scheme and amendments to the governing Regulations are made by Parliament. The Teachers’ Pensions Regulations 1997 came into force on 3 February 1998, but have been amended by further statutes which have now been consolidated into a new set of Regulations.  Following a period of consultation undertaken by the Department for Education (DfE), the new Regulations will come into force on 1 September 2010.

As part of this process, the DfE undertook a thorough review of the 1997 Regulations and took the opportunity to remove outdated provisions such as “War Service”, re-structure the regulations and use a more user-friendly, gender-neutral, format.

Whilst the 2010 Regulations do not contain any fundamental changes to the level and range of scheme benefits, both members and employers should familiarise themselves with the changes which have occurred, some of which have a material affect in certain instances.  Details of the changes are listed as follows:

Significant changes: Affecting both employers and members

• Phased retirement - Salary reduction requirement changes from 25% to 20%
• Provision to restrict average salary in certain cases – different method to deal with significant increases in salary prior to retirement (applying to retirements on or after 2 September 2010)
• New Interest rate calculation for arrears of contributions (effective from 1 December 2010)

Employers: Matters affecting employer administration

• Paid family leave
• Greater clarity on exclusions from Contributable Salary
• Recovery of unpaid contributions
• Residential Emoluments
• Employments pensionable on election (within Parts 2 and 3 of Schedule 2)
• Provision for employers to settle valid "Preston" claims without claims up to 31 August 2012 without acclaim to the Employment Tribunal
• Changes affecting Independent schools or "Accepted schools"

Active Members: Matters affecting Active members (with consequential impact on employers in some cases)

• Additional Pension
• "Start date" for Additional Pension by monthly payment
• Payment of single contributions to Additional Pension
• Additional Pension - Paid Up Credits
• Additional Pension - Reserved Forces
• Members joining the TPS from the Teachers’ Schemes in Scotland, Northern Ireland, the Isle of Man and the Channel Islands
• Transfer values where part of the benefits have been taken
• Post retirement leavers with less than 1 year’s qualifying service

Matters affecting members about to retire

• Re-imbursement of pre 1973 member contributions
• Payment of interest on certain awards
• Commutation on grounds of serious ill-health
• Commutation on grounds of triviality
• Lump sum rule for members over 75
• Short Service Incapacity Grant (SSIG),
• Lifetime Allowance (LTA) charge

Matters affecting Pensioners

• Discretion to cease and recover benefits
• Evidence of continued entitlement

Matters affecting Pension Credit Members (PCMs)

• NPA for mixed service PCMs of 65
• Introduction of Actuarially Adjusted Benefits for PCMs
• The conversion of pension to lump sum for PCMs in certain cases

Death Grant provisions

• Death benefits when award papers are being processed
• Deductions from "out-of-service" death lump sums
• Nominations to receive the Death Grant
• Scheme members called up into the Reserve forces
• Supplementary Death Grant benefits for Additional Pension and Total Incapacity Benefit (TIB)

Budget - June 2010

Changes to uprating - Q & A
Independent Public Service Pensions Commission - Q & A
Changes to annuity arrangements - Q & A

New personalised calculators/modellers available

The following calculators/modellers are now available for scheme members who have not previously received an award of retirement benefits under the TPS, enabling the calculation of personalised estimates based on current information held by Teachers’ Pensions:

• Cost of buying Additional Pension benefits
• Conversion of Pension to Lump Sum

Access to the calculators/modellers is via the On-line Forms link within our secure website; My Pension Online. If you have not previously done so then you will need to register in order use this service. Registration is free, and when you have successfully registered we will provide you with a unique PIN number (by email or SMS text) so that you can login immediately.

Information for prospective Academies (PDF, 43KB)

Please find above information for schools considering going down the route of taking up Academy status in the light of recent government announcements.

The Teachers' Pensions Regulations 2010 (SI 2010 No 990) were laid before Parliament on 1 April 2010 and will come into force on 1 September 2010.  A summary of the changes in the TP Regulations is available below.

Summary of the changes in the Teachers' Pensions Regulations 2010 (PDF, 69KB)