Understanding the Teachers’ Pensions Schemes (Amendment) Regulations 2025

The Department for Education has introduced the Teachers’ Pensions Schemes (Amendment) Regulations 2025, with some key changes that aim to ensure the sustainability and fairness of the Teachers’ Pension Scheme (TPS) in England and Wales. Here’s a simplified breakdown of what’s happening and why it matters:

Key Changes and Their Implications:

1. Adjustment of Member Contribution Tiers:

   • The amendments aim to ensure that the collective contribution from members remains at 9.6% of pensionable salary. This percentage is crucial as it aligns with requirements laid out in the Public Service Pensions Act 2013.
   • Currently, the contribution structure was projected to yield only 9.45%, necessitating an adjustment. As a result, from 1 April 2025, contribution rates for salary bands above £34,873 will see an increase of 0.3 percentage points, while the lowest salary band remains unchanged to protect lower-paid members.

2. Fair Deal Provisions:

   • The Fair Deal policy allows employees to retain access to public service pension schemes when they're transferred to private sector employers. Recent changes now extend this provision to Further Education (FE) colleges, following their reclassification as public sector organizations by the Office for National Statistics.
   • This update will be applied retrospectively from 14 November 2024, aligning with HM Treasury’s final policy confirmation date.

3. Miscellaneous Amendments:

   • Updates include aligning regulations with recent legislative changes, formally recognizing the National Institute of Teaching within the scheme, adjusting employer contribution deadlines, and correcting an error concerning pension sharing orders for divorced members.

Consultation and Feedback:

The draft regulations were open for consultation, receiving input from 187 respondents, including individuals and organizations. A significant portion of feedback focused on financial impacts on members and the retrospective application of the Fair Deal amendment. The Department has addressed these concerns in its consultation response, ensuring transparency and clarity in the amendments.

Why These Changes Matter:

• Financial Stability: By adjusting contribution rates, the scheme aims to maintain financial stability without imposing undue burdens on taxpayers.
• Fairness and Inclusivity: Protecting lower-paid members and extending Fair Deal provisions to FE colleges ensures the scheme remains equitable and inclusive.
• Regulatory Alignment: These changes ensure that the TPS aligns with current policies and legislative frameworks, providing clarity and consistency for all members.

Looking Ahead:

The Department will review the member contribution tiers during the next valuation period (April 2027 to March 2031) to ensure ongoing alignment with policy goals. This proactive approach, along with regular monitoring, aims to uphold the scheme's integrity and effectiveness for the future.

For members and employers, detailed guidance and updates will be available on the Teachers’ Pensions website, ensuring that everyone affected by these changes is well-informed and prepared.