The Teacher’s Pension Scheme has issued a statement correcting some common misconceptions that are arising in the independent schools sector. It is important that these misunderstandings are challenged, as they could impact decisions on staying within the Scheme.
Independent Schools can opt-out of the Teacher Pension Scheme and are not required to automatically enrol teachers into the Scheme. Instead, independent schools are expected to provide an alternative work-based pension scheme, and independent schools might take this option due to the perceived high-cost employer contributions.
There are two misconceptions that the Teacher Pension Scheme wishes to correct:
- That the employers’ contributions are set to rise considerably in 2024, and
- There will be an exit charge from the Scheme, which will be backdated.
Employer’s contribution unknown
The employer contribution rates for 2024 will not be set until late 2023. Consequently, any rumour that there will be a significant rise is just a rumour. It is impossible to know what the valuation of the Pension Scheme will be at that time, and any estimates are not founded on reasonable evidence.
The Teacher Pension Scheme promises to inform members at the earliest possible moment, allowing organisations and individuals to make sensible preparations.
There will be no exit charge
The idea that there will be an exit charge is false. There will be no such charge. For the Scheme to make this decision would require legislation, which will be preceded by a public consultation. Consequently, with no possibility of an exit charge, the idea of this being backdated is also false.
Reassuring members
The Teacher Pension Scheme aims to support and reassure its members. To find the latest news and information about your pension, you can visit your member’s hub online. Alternatively, you may wish to speak with an independent financial advisor about your pension options.
“A pension is a long-term contract that is not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age).”
The content in this article was correct on May 29th 2022. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pensions for teachers and non-teachers. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.
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