Pension contributions for most teachers will increase next month under new regulations laid before Parliament today.
The Department for Education has published the outcome of its consultation on increased employee contributions to the Teachers’ Pension Scheme (TPS).
All teachers apart from those on £34,289.99 or lower will see their contribution rate increase by 0.3 percentage points from 1 April.
The new teacher pension rates
The regulations laid before Parliament today set out the new rates that will apply.
Those earning £34,290 to £45,158.99 will now contribute 8.9 per cent - an increase equivalent to around £8 per month.
For teachers earning £110,000 or more, the increase will be around £17 per month.
Currently, employers contribute 28.6 per cent of an employee’s salary to the TPS.
Members of the TPS are required to contribute 9.6 per cent collectively. This contribution requirement is shared out by the tiered rates that together add up to 9.6 per cent.
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The DfE set out the proposed changes last year as the government estimated the existing contribution tiers would add up to only 9.45 per cent.
As a result, it said the structure needed to be adjusted to make sure a 9.6 per cent yield was achieved.
The DfE said nearly half (48.6 per cent) of respondents to the consultation agreed the proposed amendments delivered their aims.
In its response today, the DfE said teaching unions such as the Association of School and College Leaders, the NASUWT and the NEU agreed the proposed change to contribution tiers was the preferred approach to managing the shortfall.
Salary impact
However, the NEU said this did not mean that it agreed members should have to contribute an average 9.6 per cent of their pensionable salary.
Several respondents also expressed concern about the financial impact of the changes.
The DfE said it is “mindful of the impact” and that affordability was one of its key considerations, which is why it has left the lowest paid with unchanged contributions.
Some respondents also raised concerns about the impact of the changes on members opting out of the scheme. The DfE said it monitors monthly opt-out figures and will continue to do so.
Currently, it said, “there is no indication that the proposed adjustment to the member contribution structure is likely to increase the number of members opting out of the scheme”.
