Forced out of the TPS

FIRSTTIMER

TPS seems to be the civil service pension that asks for the biggest contribution from both employees and employer compared with NHS/Alpha etc. I am shocked at the contributions.

Salary circa £50k and you end up having to pay 11% Employee + 26% Employer for an accrual of only 1/57 when civil service is circa 5% employee rate and an accrual of 1/45. Teachers seem to be paying through the roof.

zagfles

FIRSTTIMER wrote: »

TPS seems to be the civil service pension that asks for the biggest contribution from both employees and employer compared with NHS/Alpha etc. I am shocked at the contributions.

Salary circa £50k and you end up having to pay 11% Employee + 26% Employer for an accrual of only 1/57 when civil service is circa 5% employee rate and an accrual of 1/45. Teachers seem to be paying through the roof.

The teacher's scheme is charging employers and employees the right sort of amount. That's how much is actually costs these days for a typical DB scheme with accrual rates around 1/50-1/60th, something around a third of salary or more.

Other scheme which provide similar benefits cost just as much, and someone, employees, employers, the taxpayer, or a combination, has to pick up the bill.

Thrugelmir

FIRSTTIMER wrote: »

Salary circa £50k and you end up having to pay 11% Employee + 26% Employer for an accrual of only 1/57 when civil service is circa 5% employee rate and an accrual of 1/45. Teachers seem to be paying through the roof.

Employer contribution of 26% isn't just for the current employee.

Blackbeard_of_Perranporth

So in actual fact, it appears that the TPS has a shortfall and the employers are being asked to top it up?

As happened elsewhere, the schemes will be closed down and cash contribution alternatives replacing it. Good job it is not nest, the get out of SFA scam!

zagfles

FrustratedTeacher wrote: »

The first communication we received on this proposed change stated that contracts will be terminated and re-issued in the event there is no agreement reached. We take it from this that we have no choice.

There has to be a consultation, see https://www.tpr.gov.uk/-/media/thepensionsregulator/files/import/pdf/employer-duty-to-consult-on-scheme-changes
If the pension is contractual, then like with any change to a contract, one party to it obviously can't change it without the consent of the other party. However contracts will have termination clauses, either party can terminate the contract subject to a notice period. So they'll seek your agreement to the change, and if you don't agree they'll terminate your contract, and might give you the opportunity to sign a new contract with different pension provision.

But for pension changes they have to go through the consultation process described above, they can't have already decided the outcome, they must consult on this. As you're in a union get them involved in the consultation process.

zagubov

OP, I'd be bracing myself for a fight. I think a similar crisis developed in the USS. There are other posters here who might know how that worked out.

I'm afraid you need to start planning for the future now.

FatherAbraham

FIRSTTIMER wrote: »

TPS seems to be the civil service pension that asks for the biggest contribution from both employees and employer compared with NHS/Alpha etc. I am shocked at the contributions.

Salary circa £50k and you end up having to pay 11% Employee + 26% Employer for an accrual of only 1/57 when civil service is circa 5% employee rate and an accrual of 1/45. Teachers seem to be paying through the roof.

Try comparing those contribution rates with what members of defined-contribution schemes have to pay if they want to accrue similar benefits, and then you might get a reality check.

Seabee42

An alternative to Defined Benefit does not have to be bad. Defined Benefit schemes utilise cross subsidy, i.e. the younger members are subsidising the older, generally everyone pays the same but the older members have less investment time so their benefit costs more. In addition as mentioned above the employer contribution includes a deficit contribution as well.


The reason why people end up less well off is employers do not pay on average even 15% to money purchase schemes (less in means less out).


So how much are they offering as an alternative and how do you fit in the age profile? I expect you will be worse off but it is not automatically so.

FatherAbraham

Seabee42 wrote: »

An alternative to Defined Benefit does not have to be bad.

It is quite true that there are some advantages to undefined-benefit, or money-purchase pension schemes.

In particular, the member gets to choose when to take benefits (once the statutory age of 55 has been reached), and whether to provide post-mortem benefits for a spouse, for descendants, or for one's dog.

Defined-benefit schemes can define benefits which don't suit some members.

Fermion

According to the House of Commons Library it is not a true DB pension scheme but a notional scheme.

Like most of the public service schemes, the Teachers’ Pension Scheme operates on a pay-as-you-go (PAYG) basis. 7 This means that employer and employee contributions are paid to the sponsoring government department, which pays out pension benefits, netting off the contributions received.
The Teachers’ Pension Scheme (TPS) is “notionally funded”. This means that periodic valuations are carried out as though there was a fund. Contributions are set on the basis of these valuations.

The problem with this particular scheme is that there is history or mismanagement. Schools were allowed or even encouraged to let under performing Heads and Senior Managers retire early with significantly enhanced pensions. The schools didn't care because they weren't managing the TPS pension fund.

Interesting that a great many Teachers only consider moving to schools in the Independent Sector because they can still contribute to the TPS. If private schools decide to withdraw from the TPS then I suspect they will suddenly find it difficult to fill these posts.