The Department for Education is consulting on an increase in employee contributions to the Teachers’ Pension Scheme (TPS).
Under the proposals, most members of the TPS would see contribution rates increase by 0.3 percentage points from 1 April next year. However, those earning less than £34,290 a year would not be affected, “to protect lower-paid members”.
Those earning the highest salaries (more than £98,909) would see their contribution rate increase from 11.7 per cent to 12 per cent.
There are six employee contribution tiers to the TPS. The government is proposing no change to the 7.4 per cent rate for those in the lowest-paid tier.
Under the changes, the DfE estimated the take-home pay of someone earning £40,000, for example, would be hit by £8 a month. This increases to £17 a month for someone earning £110,000
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.
In the consultation document, the DfE said a “small adjustment” is needed to the current tiered membership rates to make sure the 9.6 per cent contribution is met.
It is estimated the current tier rates add up to a collective contribution of 9.45 per cent.
The DfE said it worked with the Teachers’ Pension Scheme Advisory Board (SAB) to develop the proposed changes. The SAB’s recommendation aimed to ensure teachers “continue to participate in the scheme”.
Louise Hatswell, pay specialist at the Association of School and College Leaders, said: “Any increase in employee contributions, however small, will clearly have an impact on take-home pay. We will be consulting with members before making a full response to the consultation.”
The changes would be made by amending the Teachers’ Pension Scheme Regulations 2014 to implement the new rates.
This comes after the chief executive of the United Learning multi-academy trust set out plans to introduce an alternative pension scheme at the trust that would allow staff to earn more take-home pay and make lower employee contributions.
CEO Sir Jon Coles said the alternative pension hopes to address the “growing number of staff” opting out of the scheme “because it is too costly for them”.
The consultation on the TPS changes closes on 23 January.
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