Teachers' Pension Scheme Changes

As I hope you are aware, a 12 week consultation on proposals to change various elements of the Teachers' Pension Scheme was subject to a 12 week consultation in 2006. Following that consultation, revised scheme arrangements offering greater flexibility and scope for retirement planning for both new and existing members will be introduced from 1st January 2007. Work continues on drafting the regulations in line with the agreement outlined in the consultation document (see below). This will bring the negotiation process with teacher unions, employer organisations and the DfES to a conclusion, with the laying of regulations before Parliament taking place in the early part of December 2006.

More detailed information on the review of the scheme is available on the Teacher's Pensions (TP) website, where you should follow the link headed "Pensions Update." In addition to details about the new scheme, you can view the result of the consultation that took place, a pay modeller and illustrative costs of buying £1000 of Additional Pension Benefits as set out in section 4.4 of the consultation document. I am aware that not every teacher has easy access to a computer with internet access but given the importance of the subject matter, I should be glad if you would make special arrangements on this occasion.

I would also like to draw your attention to the Teacher's Pensions (Miscellaneous Amendments) regulations that came into force on 6th April 2006, again available from the Teacher's Pensions website within the "Pensions Update" section setting out a number of changes to both the teacher's pension scheme and the teacher's additional voluntary contribution scheme, as a result of HM revenue and customs legislation.

Click here for a letter which I ask you please to download and give out to all teaching staff employed in your school. (Separate letters are being sent to sessional tutors and supply teachers).

Although much of this information is not about the immediate future, there are some important changes coming into effect on 1st January 2007 that will affect most schools. Principal amongst these is the automatic scheme membership for part-time teachers.

The implication of the automatic opting-in of all part-time teachers and the fact that in order to leave the scheme part-time teachers would positively have to opt-out is the strong likelihood that more teachers will be brought into the scheme in the future, thus incurring for the employer, the employers' contribution.

You will also see that the employers' contribution rate will increase from 13.5% to 14.1% for all staff, including future part-time staff with effect from 1st January 2007. You were given advance notice of this in MI 95/06 including reference to the additional in-year costs.

As a result of the letter I'm asking you to distribute, supported no doubt by encouragement from the teacher professional associations, existing part time teachers will also be likely to enter into the pension scheme. In any case part time teachers who have a change of contract on or after the 1st January 2007 will also automatically be included in the scheme. We have been in discussion with the teacher trade unions and the chairs of NASH, SNAPP and NASSH and proposed to determine that any variation in contract notified to us by the school resulting in written confirmation of that variation, will constitute a change of contract. This includes transfers within Norfolk County Council between schools/establishments, change of hours, extensions or temporary contracts and a change of job within the same school/establishment. Again, where this occurs, this will incur additional costs of the employers' contribution rate.

Excessive salary increases in the final year of service for teachers (including Headteachers).

One of the lesser known elements of the pension scheme is the provision for dealing with the pension implications of "excessive" salary increases in the final year of service for teachers. The key principal is that an increase in the salary rate which is more than 10% above the standard increase will not be used in the calculation of benefits unless the employer pays an additional contribution to reflect the actuarial equivalent of the increase in benefits. (We would not advise governing bodies to meet these excess costs).

However, the issue often only surfaces when a member of staff has been promoted, quite genuinely, a typical example of this is where a Headteacher is asked to take on the neighbouring school for a short period which coincidentally has been in one of the "best of the last 3 years" taken for pension calculation. The DfES have confirmed that where the salary increases follows promotion to a post which has been externally advertised, the salary increase will not be regarded as "excessive" salary. This should help deal with the most difficult cases, as set out above or where the teacher has been promoted to a Headteacher post. It seems likely that the DfES will continue to scrutinise cases where the 10% rule has been exceeded. Temporary promotions which have not been subject to external advertisement will not be accepted. For the sake of clarity, it seems unlikely that advertisements for posts in the local shop or a journal not necessarily seen by teachers will stand up to scrutiny.

If you need any further clarification on the above, please contact your HR Officer in the first instance.