Answer:
The valuation is the process by which scheme costs are measured and managed. It assesses the long-term cost of providing pensions and other benefits to members of each public service pension scheme and determines the appropriate employer contribution rates going forward.
What was the result of the latest scheme valuation for the Teachers’ Pension Scheme?
Following the scheme valuation, it was determined that employer contributions needed to increase to ensure that the costs of the pension scheme remain affordable, at the levels set in 2015. This increase was put in place from September 2019. The valuation also indicated that while costs were likely to increase in respect of the period 2019 to 2023, over the longer-term member benefits need to rise to return them to the level agreed in 2015. Member and employer representatives came together to discuss changes to member benefits, which led to a recommendation that, for the Teachers’ Pension Scheme, the rate at which pensions accrue should be improved.
Before any such change to the benefit structure could come into effect, the Government was denied leave to appeal the decision that the Transitional Protection provided as part of the 2015 public service scheme reforms was discriminatory on age grounds. An Employment Tribunal (the McCloud and Sargeant cases) will now determine how this will be remedied. As a result the change to the benefit structure is currently on hold pending the Employment Tribunal decision.