§ The Minister for School Standards (Mr. David Miliband)
The Government Actuary has reported on the results of his valuation of the Teachers' Pension Scheme (TPS) as at 31 March 2001. His report recommends that the employer contribution rate for the TPS should increase from the current rate of 8.35 per cent. to 13.5 per cent. from 1 April 2003. The contribution paid by teachers will remain at 6 per cent. of their salary.
The majority of the increase (equating to 4.75 per cent.) arises because for the first time the cost of pensions increase (the annual cost of inflation increases) will be covered by the employer contribution, whereas previously it was funded directly by the Exchequer. Employers in the maintained sectors have been provided with additional funds to help them to meet the cost of this increase. The remaining 0.4 per cent. of the increase is as a result of demographic changes since the last valuation, most notably improvements in life expectancy. This anticipated pressure was taken into account in the 2002 Spending Review settlement for education.
A copy of the Government Actuary's report has been placed in the House of Commons' Library