Pensions news update

The latest information about changes to the TPS and state pensions.

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Teachers’ Pension Scheme Consultation on employee contribution rebalancing

The DfE has launched a consultation on various miscellaneous amendments to the TPS. The most important is a ‘re-balancing’ of employee contributions. The contribution rate set for the TPS was 9.6 per cent from 2014. The bands have got out of line down the years because pay increases were lower than CPI (the indexation mechanism for the bands) and currently only brings in 9.45 per cent.

The proposal to get back to 9.6 per cent fully protects the lowest band and spreads the increase out amongst the other bands, with higher earners bearing the greatest burden. The proposal was discussed and agreed in the TPS Advisory Board. There was tripartite agreement with employers, unions and the DfE agreeing this was the best way to do it. An official NEU response will be sent to the DfE setting out our agreement to the proposal. 

Teachers’ Pension increase April 2025

The 2025 increase for TPS pensions in payment from April 2025 is expected to be 1.7 per cent, in line with the September 2024 increase in the Consumer Prices Index. 

Indexation of career average rights April 2025

All serving teachers are now in the career average section of the Teachers’ Pension Scheme. They build up 1/57 of their pensionable earnings as pension each year. These pension rights are then increased each year until retirement at CPI inflation + 1.6 per cent for teachers who stay in teaching.

The April 2025 increase will be based on the CPI figure from September 2024 - which is 1.7 per cent. The NEU is awaiting confirmation from the Treasury but is therefore expecting an indexation figure of 3.3 per cent to be used in April 2024. The indexation for teachers who have left teaching (and who do not return for a minimum period within 5 years) is CPI only – so a 1.7 per cent increase in April 2025. The 1.7 per cent increase also applies to deferred pension rights in the final salary scheme.

State pension increase

The basic State pension is usually indexed to the higher of CPI inflation, average earnings increases or 2.5 per cent – known as the ‘triple lock’. This has operated since 2010 (with the exception of 2022/23). The NEU believes the triple lock should be maintained.

The increase in the basic State pension for those who reached state pension age before April 2016 will be 4.1 per cent in line with the increase in average earnings. Therefore the maximum basic State pension will increase to £176.45 a week from April 2025. Increases in the state additional pension under the old state pension system are linked to the CPI increase, so these increase by 1.7 per cent.

Pensioners on the single-tier state pension who have reached the state pension age since April 2016 will also get a 4.1 per cent increase. The maximum weekly payment will increase to £230.25 a week in April 2024.

Teachers’ Pension Scheme Age Discrimination Cases (McCloud) - summary

Transitional protections meant older members of the TPS remained in the Final Salary Scheme or delayed joining the Career Average Revalued Earnings (CARE) scheme whereas younger members were immediately transferred into the CARE Scheme as soon as it was implemented in April 2015.  The Courts determined in the ‘McCloud’ judgement that this was discriminatory against younger members and ordered the government to rectify the situation.

Eligible scheme members will choose between final salary or career average scheme benefits for the period 2015 to 2022 when they take benefits from the scheme – effectively getting the better of the two schemes. The choice will for most people be made at the point of retirement. Members can find out whether they are affected through a handy decision tree on the Teachers’ Pension Scheme website.

Compensation arrangements for members in the Local Government Pension Scheme will be slightly different. All LGPS members joined the career average scheme in 2014, but some older members had the benefit of a final salary ‘underpin’ meaning they would not get less than they would have received if they’d stayed in the previous final salary scheme. This underpin will now be extended to all members until 31 March 2022.

Members who have taken retirement benefits before 1 October 2023 will be provided with their choice as soon as practicable after 1 October 2023. There is nothing which members can do proactively to speed the process up. If you are affected you will be contacted in due course.

McCloud – Remediable Service Statements

Retired members and others who have taken benefits from the TPS will soon be in a position to make a choice on final salary or career average benefits for the April 2015 to March 2022 period.

The Public Service Pensions and Judicial Offices Act 2022 provides that members should receive a ‘Remediable Service Statement’ (RSS) within 18 months of 1 October 2023. The RSS will include details of remedy period benefits calculated under final salary and career average rules to allow members to make an informed choice.

Active members must subsequently receive an RSS every year annually. Deferred members can request an RSS each year. When members apply for retirement benefits, they will receive an RSS which includes their final benefit calculations. They will have 12 months from the RSS to make a choice. If no choice is made then the pension cannot be processed. A member can change their choice at any point before their application for retirement benefits has been processed.

Eligible retired members should be provided with an RSS within 18 months of 1 October 2023 and will then have 12 months from the date of issue to confirm their decision between final salary and career average benefits for the 1 April 2015 to 31 March 2022 period. If they do not make a decision the regulations allow the scheme manager to ‘deem’ an election for career average benefits if that would have a higher monetary value, otherwise final salary benefits will be paid. Teachers’ Pensions currently believes it will issue 100,000 forecasts by the end of March 2025, with the other 25,000 issued by the end of September 2025.

Cash Equivalent Transfer Values (CETVs) and Pension Sharing Orders (PSOs)

The NEU is aware of the continuing delays in the TPS providing CETVs and PSOs. The original delay stems from the change in the ‘discount rate’ in 2023. This has been compounded by the McCloud remedy which has added additional complications.

Most cases can now be progressed but the backlog is expected to extend well into Q1 2025. Cases involving members who bought flexibilities in the career average scheme can be progressed, but are having to be done manually so there may be further delays. Cases involving retirees are not being progressed at the moment because of lack of relevant guidance from HM Treasury. This problem applies across the public sector and is not limited to the TPS.

The NEU has been highlighting the disruption and inconvenience to members to the DfE and Teachers’ Pensions and has stressed (repeatedly) the importance of accurate communication. The Pensions Regulator is aware of the continuing situation but has not taken action against Teachers’ Pensions to date because the issue is cross public sector.

Increase in minimum age at which private pension rights can be accessed.

The ‘minimum normal pension age’ (the minimum age at which private pension rights can be taken) is set to increase from 55 to 57 from 6 April 2028. This is an over-riding legislative change from the Government intended to link the age at which people can take private pension rights to the state pension age (which will be 67 from 6 April 2028 under current legislation).

There are exceptions which allow some groups to keep a ‘protected pension age’ at 55. This includes final salary rights in the Teachers’ Pension Scheme (but not career average rights) as the right to take a pension at 55 was set out in scheme regulations. To take pension rights at 55 from 6 April 2028 you must have been in the TPS before 4 November 2021.

Check your pension records

The NEU receives many reports of pension records being incorrect. The growing fragmentation of the school system means a growing number of small employers, and more changes of employer for teachers over their careers. These are perfect conditions for mistakes to be made.

Members should sign up with the Teachers’ Pension Scheme’s ‘MyPensionOnline’ service to check that their pension is correct. Teachers can register at www.teacherspensions.co.uk and will need their national insurance number and an email address. 

All members should check their salary details and that their contract and days out of service are correct. It is much simpler to deal with errors as they arise rather than shortly before retirement. It is therefore important to keep payslips and other salary records (like P60s).

The NEU recommends that you check your pension records and pension data at least once a term.  You should raise any issues with your pension records immediately with Teachers’ Pensions.

NEU Pensions website material

The NEU website pensions section includes news, briefing materials and PowerPoints intended for use by reps and district officials.

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Pensions

In whatever capacity you work in education, there is likely to be an occupational scheme available for you.

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