Dear Member
Please find the latest update on the Teachers’ Pension Scheme form ISBA that they have asked me to share with you.
TPS 2020 Valuation – Indication of the Possible New Employers Contribution Rate
HM Treasury expect to finalise the 2020 Valuation in September 2023. However, they have made sufficient progress on the various HM Treasury led Directions to be able to say that “ the direction of travel is in the order of 5% points increase in the employer’s contribution rate” (from the current rate of 23.6%).
HM Treasury and DfE are content for employer organisations and teaching unions to communicate this to their members, provided they use the form of words above. This may appear pedantic, but they don’t want to be quoting a precise figure in advance of the finalisation of the Valuation.
The “in the order of 5% points” increase results wholly from the change in the SCAPE Discount Rate (down to 1.7% from 2.4% in 2016), reflecting the lower prospects for GNP Growth, which the SCAPE Discount Rate reflects. There were some offsetting assumptions, such as changes in the longevity assumption and employers’ overpayment since September 2019, but not enough to fully offset the very significant reduction in the SCAPE Discount Rate. The cost of the McCloud judgement is also reflected in the 2020 indicative Valuation.
This will be unwelcome news but this early indication, the most solid so far, gives an assumption to use when budgeting for employer costs from April 2024.
With all best wishes
Emma
