TPS surplus more than triples to £177m

The surplus of the Teachers’ Pension Scheme (England and Wales) increased from £54m to £177m in the 12 months ended 31 March 2020, according to the scheme’s annual report and accounts.

The change was driven by an increase in total value of assets from £598m to £769m, with the impact of this being slightly tempered by total liabilities rising from £544m to £592m over the same period.

The scheme had a provision for pension liability of £432bn as of March 2020, up from £359.5bn in March 2019

Scheme membership is voluntary and is open to members of the teaching profession in England and Wales who are a teacher or lecturer between the ages of 16 and 75 in pensionable service employed by a local authority or an academy trust, some independent schools, some further or higher education establishments or other approved scheme employers.

Employee contribution bands did not change in the period, but employer contributions were increased from a rate of 16.4 per cent to 23.6 per cent in September 2019, following the latest scheme valuation.

The period also saw pension payments rise by 2.4 per cent from 8 April 2019, in accordance with scheme regulations.

Contribution rates are determined by the Secretary of State for Education, taking advice from the scheme’s actuary, with contributions received from members and their employers used to offset payments to current pensioners with the balance of funding provided by parliament.

The annual report also detailed events following the 31 March, noting that July 2020 had seen HM Treasury launch a 12-week public consultation looking to support the delivery of an appropriate McCloud case remedy for the affected schemes, including TPS.

The consultation allowed the estimate of the past service cost involved to be refined, with a provision having been revised to £3.6bn in respect of the challenge.

In addition, a provision of £1.75bn was also set aside relating to Guaranteed Minimum Pensions.

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