Recently the Government announced an increase in teachers’ salaries. Some members have since asked how this will affect their pension payments. The salary bands for the different contribution rates are amended at the start of April, with the lower and upper range of each band increasing in line with the rate by which CPI rises in the year to September in the previous year. In April 2018 the lower and upper limit for each band was increased by 3%, as this was the rate by which CPI rose in the year to September 2017.

This means that the cost of living increase has already been factored into the salary bands for the contribution tiers.

A member receiving a 3% increase in September may find themselves moving up a contribution tier, but this is simply because they moved down a tier in April and are now returning back to the tier they’d been in before we increased the lower range of the salary band in April. For example, the lower range for the 8.6% tier was £26,260 but increased to £27,048 from April 2018. A member with an annual salary of £26,260 was therefore moved from the 8.6% tier to the lower 7.4% tier from April. If that same member receives a 3% pay rise in September, increasing their salary to £27,048, they’ll move back to the 8.6% tier from September onwards.

You can find more information about the contribution rates on our website https://www.teacherspensions.co.uk/members/resources/forms/updates.aspx