Every four years, the Government Actuary’s Department carries out a valuation of all unfunded public service pension schemes, including the Teachers’ Pension Scheme.  One of the purposes of the valuation is to assess the cost of pensions being provided to active members of each scheme and to determine the appropriate employer contribution rates going forward.

As a result of the current valuation of the Teachers’ Pension Scheme, the Government has determined that the employer contribution rate should increase to 23.68% of contributory pay with effect from 1 September 2019 (this includes the administration levy of 0.08%).

The Department for Education has launched a consultation seeking views on their proposal to support certain education institutions with the increase to the Teachers’ Pension Scheme in 2019 to 2020.  The consultation closed on 12 February 2019 and the Department will respond in due course.

Member benefits

The valuation also assesses the value of benefits against the employer cost cap mechanism.  If the value of member benefits falls outside an agreed range, the scheme is required to make adjustments in order to bring the cost cap back to its original starting point. Initial valuation results show that the value of benefits being accrued by members of the Career Average arrangement, are below the level agreed in 2015. Under normal valuation processes, changes to the benefit design would be needed to return member benefits to their agreed level.

However, this aspect of the valuation is on hold pending the outcome of a legal case in connection with transition protection provided to some members when the career average scheme was introduced.  The case, brought by members of the Judicial and Firefighters’ pension schemes, was heard in the Court of Appeal. In December 2018, the Court determined that the transitional protection offered to some members of the Scheme, whereby they remained in the Final Salary arrangement if they were within 10 years of their Normal Pension Age on 1 April 2012, was discriminatory on age grounds. The Government is seeking permission from the Supreme Court to appeal this decision. We’ll provide a further update when more information becomes available.

For more information, we’ve created a series of FAQs on our website.