The 2020 Valuation of the Teachers’ Pension Scheme is nearing completion and the Department for Education expects to be able to publish the outcome by the end of September 2023.

The Department is aware that there’s been significant speculation about what contribution rate employers will be required to pay when the outcome of the 2020 valuation is implemented in April 2024, with estimates ranging from an increase between 5 to 10%.

Whilst it’s still too early to determine the precise outcome, it’s now clear, following receipt of the firmed-up valuation directions from HM Treasury, that the likely outcome will be close to the lower end of speculative estimates. That follows confirmation over a number of factors that lead to downwards costs pressures, such as that driven by changes in the rate at which longevity is expected to improve, which collectively serve to offset some of the increase that results from a change to the discount rate to be used – with the latter being behind the speculation of potential double-digit increases.

The Department for Education appreciates the impact that any increase in pension related costs has on employers’ budgets. That’s why it’s worked with HM Treasury to secure the position whereby schools, academies and other employers that are centrally funded will be provided with additional financial support in 2024-25. This is in recognition of the additional costs involved and why they continue to work with HM Treasury to seek to secure such funding for employers in the HE sector. Whilst similar support can’t be provided to independent schools that participate in the Teachers’ Pension Scheme, it’s hoped that the above information will be helpful in terms of planning budgets.

Further updates will be provided as soon as possible.