On 27 October the Department for Education (DfE) published the outcome of the 2020 valuation of the Teachers’ Pension Scheme (TPS). A five per cent increase in the employer contribution rate has been confirmed, to take effect from 1 April 2024. The TPS announcement is available here. The new employer contribution rate will therefore be 28.68 per cent.
This is a further, significant increase in the employer contribution rate, impacting the independent sector. The DfE has confirmed it will provide additional funding to cover the increase for directly funded scheme employers for the 2024/25 financial year (mainstream 5-16 schools and post-16 settings, for example) but independent schools will be faced with additional costs. Independent schools that are currently consulting staff about the TPS should discuss this increase as part of that ongoing consultation. Independent schools who have previously introduced a total pay and benefits scheme will need to consider whether this increase will trigger a reduction in salaries of those staff who opted to remain in the TPS (that will depend on the terms of the scheme). For those schools who have not yet consulted staff about or amended their pension arrangements, this latest increase may well cause them to reconsider, although the news comes as no surprise because it is in line with the DfE’s earlier indication of the likely final result of the valuation of the scheme.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, November 2023