The Teachers’ Pension Scheme (TPS) ceases to be contracted out from 6 April 2016. Whilst we’ll continue to meet the minimum requirements for auto enrolment, it will do so by meeting other criteria rather than by means of being contracted out of the State Second Pension arrangement.

We expect that from 6 April 2016 you’ll use the ‘cost of accruals’ test to show that the Scheme meets the minimum requirements for auto enrolment. We have been assured by the scheme actuary that the Teachers’ Pension Scheme satisfies this requirement, with a total cost of accrual for 2015 – 2019 for the entire Scheme of 20.4%, based on the 2012 scheme valuation.

The cost of accrual needs to be at least 11% to pass the test. Since the 2012 valuation the Scheme has been reformed and now comprised of separate sections. Separate cost of accrual figures are not available for these sections, but the transitional easement provided for schemes that were formerly contracted out allows for the scheme as a whole to pass the test. The results of the 2016 scheme valuation should be available before the transitional easement period ceases. We’ll provide an update on the cost of accrual for each section of the Scheme when they become available.

Please note that as benefits accrued in the Career Average section of the Scheme are revalued each year in line with CPI + 1.6% (active members), the additional auto-enrolment test for career average revalued earnings benefits is passed by the Teachers’ Pensions Scheme.