Management Information Sheet
Teachers Pensions - Tiered Contributions
In February 2012, schools were notified of recent developments concerning changes to the Teachers Pension Scheme (TPS) - see MI 25/12. The purpose of this MI sheet is to remind you of changes that were introduced from April 2012 and which, for almost all teaching staff who are members of the Scheme, will result in additional pension contributions and a likely consequent reduction in net pay. Please remind all staff who may be affected.
As a reflection of the Government's proposals for the reform of public service pension schemes the Department for Education, following a consultation exercise last year, has introduced a system of tiered employee contributions to the TPS effective from 1st April 2012.
The amount of an employee's contribution deduction is dependant on the band the full-time salary falls within (as shown in the table below). The Scheme requires that the salary banding is determined monthly by calculating the annual salary based on the monthly earnings multiplied by 12 to give the Full-Time Equivalent pay.
Therefore, teachers may move to a different contribution band if a change in their employment results in an increase or decrease of their full-time equivalent pay. For example: a teacher had an annual full time equivalent salary rate of £38,000 and in September 2012 has this revised to £43,000 which includes a TLR of £5,000. Under the change to tiered contributions from April 2012 to August 2012 their contribution rate would be 7.6%. This would change to 8% in September as a result of the increase in their full-time equivalent pay.
Further information, a calculator and frequently asked questions are available on the Teachers' Pensions website and we recommend you signpost teachers to these to understand the impact on them personally.
The contributions calculator can be accessed at: www.teacherspensions.co.uk/public
The FAQs can be accessed at: www.teacherspensions.co.uk/employers
Employee contribution rates are now as follows:
(The employer's rate of contribution remains at 14.1%)
As a reflection of the Government's proposals for the reform of public service pension schemes the Department for Education, following a consultation exercise last year, has introduced a system of tiered employee contributions to the TPS effective from 1st April 2012.
The amount of an employee's contribution deduction is dependant on the band the full-time salary falls within (as shown in the table below). The Scheme requires that the salary banding is determined monthly by calculating the annual salary based on the monthly earnings multiplied by 12 to give the Full-Time Equivalent pay.
Therefore, teachers may move to a different contribution band if a change in their employment results in an increase or decrease of their full-time equivalent pay. For example: a teacher had an annual full time equivalent salary rate of £38,000 and in September 2012 has this revised to £43,000 which includes a TLR of £5,000. Under the change to tiered contributions from April 2012 to August 2012 their contribution rate would be 7.6%. This would change to 8% in September as a result of the increase in their full-time equivalent pay.
Further information, a calculator and frequently asked questions are available on the Teachers' Pensions website and we recommend you signpost teachers to these to understand the impact on them personally.
The contributions calculator can be accessed at: www.teacherspensions.co.uk/public
The FAQs can be accessed at: www.teacherspensions.co.uk/employers
Employee contribution rates are now as follows:
| Lower Salary | Higher Salary | Contribution Rate | Increase (compared to 6.4% contribution) |
| £14,999 | 6.4% | 0% | |
| £15,000 | £25,999 | 7.0% | 0.6% |
| £26,000 | £31,999 | 7.3% | 0.9% |
| £32,000 | £39,999 | 7.6% | 1.2% |
| £40,000 | £74,999 | 8.0% | 1.6% |
| £75,000 | £111,999 | 8.4% | 2.0% |
| £112,000 | 8.8% | 2.4% |
(The employer's rate of contribution remains at 14.1%)