Teachers' Pension Scheme - England and Wales
- 6 October 2010
- From the section Business
Which employees does the scheme cover?
Teachers and lecturers in some 2,422 schools, academies, further education colleges and "new" universities (the former polytechnics) and others in England and Wales.
How many sections are there?
How many active, deferred and retired members are there?
As of March 2009 there were 612,000 active members, 423,000 deferred members, and 567,000 pensioners and dependents.
What are the principal benefits?
It is a final-salary scheme, based on a 1/60th accrual rate with a normal pension age (NPA) of 65, offering a pension of two-thirds of final salary.
For those who joined before 1 January 2007, the NPA is 60 but the accrual rate is 1/80ths plus 3/80ths lump sum, offering a pension of half final salary.
How much is paid in?
Employees pay 6.4% of their salaries and employers pay 14.1%.
What are the funding costs of the scheme?
The scheme was last fully valued as of 31 March 2004.
Since then, from 1 January 2007, the scheme has had a standard contribution rate of 19.75% and a supplementary contribution rate of 0.75% - 20.5% altogether.
Is the scheme funded or unfunded?
Unfunded. It is paid for out of general taxation, not an underlying investment fund.
What are the scheme's assets and liabilities?
As of 31 March 2004, liabilities (the notional stock of assets needed to pay the accrued pensions) were £166.5bn.
By 31 March 2010 the liabilities had risen to £224bn.
What is the average pension in payment?
In March 2010 it was £10,000.
Have there been any changes or reforms in recent years?
Yes. From 1 January 2007 a variety of changes were made including:
1) a NPA of 65 for new recruits.
2) a 1/60th accrual rate and an improvement in the death in service lump sum from twice salary to three times, plus pensions for partners.
Are there any further changes in the pipeline?
Uprating in line with inflation will be changed from relying on the retail prices index (RPI) to the consumer prices index (CPI) in line with the recent government announcement.
Source: Department for Education.