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  • Teachers’ Pension Scheme (England and Wales)

    Annual report and accounts

    For the year ended 31 March 2019

    Ordered by the House of Commons to be printed on 22 July 2019 Accounts presented to the House of Commons pursuant to Section 6(4) of the Government Resources and Accounts Act 2000 Annual Report presented to the House of Commons by Command of Her Majesty

    HC 2407

  • © Crown copyright 2019

    This publication is licensed under the terms of the Open Government Licence v3.0 except

    where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-

    government-licence/version/3.

    Where we have identified any third party copyright information you will need to obtain

    permission from the copyright holders concerned.

    This publication is available at www.gov.uk/official-documents

    Any enquiries regarding this publication should be sent to us at Department for

    Education, Piccadilly Gate, Store Street, Manchester, M1 2WD.

    ISBN 978-1-5286-1508-2 CCS 0719588892/19 Printed on paper containing 75% recycled fibre content minimum Printed in the UK by the APS Group on behalf of the Controller of Her Majesty’s Stationery Office

    http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3 http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3 https://www.gov.uk/official-documents

  • TPS ANNUAL REPORT AND ACCOUNTS 2018-19

    Contents Accountability report ......................................................................................................... 2

    Report of the manager ......................................................................................................... 2

    Report of the actuary ......................................................................................................... 17

    Statement of Accounting Officer’s responsibilities ............................................................. 23

    Governance statement....................................................................................................... 24

    Parliamentary accountability and audit report Statement of Parliamentary Supply ............ 33

    Notes to the Statement of Parliamentary Supply ............................................................... 34

    Parliamentary accountability disclosures ........................................................................... 37

    The certificate and report of the Comptroller and Auditor General to The House of Commons .......................................................................................................................... 38

    Financial Statements ....................................................................................................... 42

    Combined Statement of Comprehensive Net Expenditure................................................. 42

    Combined Statement of Financial Position ........................................................................ 43

    Combined Statement of Changes in Taxpayers’ Equity ..................................................... 44

    Combined Statement of Cash Flows ................................................................................. 45

    Notes to the Accounts ........................................................................................................ 46

    Annex ................................................................................................................................ 64

    Glossary of key terms ........................................................................................................ 64

  • TPS ANNUAL REPORT AND ACCOUNTS 2018-19 ACCOUNTABILITY REPORT

    Page | 2

    Accountability report

    Report of the managers

    Background to the scheme

    This report covers the financial year 2018-19.

    The Teachers’ Pension Scheme (TPS or scheme) is a statutory, unfunded, defined benefit occupational pension scheme split into three distinct sections:

    • the Normal Pension Age (NPA) 60 section caters for those who entered the scheme before 1 January 2007 and has a normal pension age of 60

    • the NPA 65 section caters for those who entered the scheme for the first time on or after 1 January 2007 but before 1 April 2015 or who transitioned from the NPA 60 section following 2007 scheme reform and have a normal pension age of 65

    • both of these sections provide benefits based on final salary and length of service

    • the 2015 section caters for those who entered the scheme for the first time on or after 1 April 2015 and those who transitioned from the NPA 60 and NPA 65 sections following the latest scheme reforms. The 2015 section provides benefits based on career average earnings and has a normal pension age equal to state pension age

    The scheme is governed by statutory regulations (currently statutory instruments), these being: The Teachers’ Pensions Regulations 2010 (as amended) and The Teachers’ Pension Scheme Regulations 2014 (as amended).

    Membership of the scheme 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

    • an independent school which has been accepted into the scheme

    • a further or higher education establishment that has been accepted into the scheme

    • an accepted function provider (a company awarded a contract to perform functions on behalf of a local authority)

    • other approved scheme employer.

  • TPS ANNUAL REPORT AND ACCOUNTS 2018-19 ACCOUNTABILITY REPORT

    Page | 3

    Contributions to the scheme are set at rates determined by the Secretary of State, taking advice from the scheme’s actuary. Contributions received from members are used to offset payments to current pensioners with the balance of funding provided by Parliament. The scheme’s administrative expenses are borne by scheme employers, payable as a percentage of pensionable earnings. It is envisaged that this charge will be reviewed alongside scheme valuations to ensure that the income raised is equal to the cost.

    Pensions are increased in accordance with the Pensions (Increase) Act 1971 and the Social Security Pensions Act 1975, with annual increases being determined by the prevailing Pensions (Increase) Order. Retirement and other pension benefits are set out in regulations made under the Superannuation Act (1972) and Public Service Pensions Act (2013) and are paid by public funds provided by Parliament. Members contribute on a “pay as you go” basis, with these contributions (along with those made by employers) being credited to the Exchequer under arrangements governed by the above Acts.

    The TPS Annual Report and Accounts (ARA) shows the movements in scheme funds and the financial position of the scheme at the year-end as follows:

    • the Statement of Financial Position shows the unfunded net liabilities of the scheme

    • the Statement of Comprehensive Net Expenditure shows, amongst other things, the change in the net liability analysed between the pension cost, enhancements and transfers in, interest on the scheme liabilities and actuarial adjustments.

    Further information about the actuarial position of the scheme is set out in the Report of the actuary on page 17.

    The scheme is managed by the Department for Education (Department or DfE) and administered under contract by Capita Business Services Ltd (Capita).

    Outside the scheme, there are provisions for premature retirement compensation payments made on behalf of employers and for the recovery of the costs of those payments from employers. These provisions are also managed by the Department and administered under contract by Capita.

    Corporate Governance

    The scheme is governed at three levels:

    • day to day service delivery

    • strategic

    • the Teachers’ Pension Scheme Pension Board (TPSPB) who provide oversight.

    Where appropriate, issues are escalated through the governance structure.

    Details of the Governance Structure, the Boards and their membership, together with attendance details, can be found in the Governance Statement on page 24.

  • TPS ANNUAL REPORT AND ACCOUNTS 2018-19 ACCOUNTABILITY REPORT

    Page | 4

    Administration

    Following a competitive tendering exercise, Capita were awarded a new contract to administer the TPS for seven years from 1 October 2011. In November 2014, the contract was extended by three years bringing the contract end date to September 2021. The Department is currently undertaking a project to define the administration model post September 2021.

    Changes to the Teachers’ Pension Scheme

    Employee contributions are levied on a tiered basis dependent upon salary. Whilst the employee contribution rates for each band level remain static in 2019-20, when compared to 2018-19, the salary bands will increase in line with the change in the Consumer Prices Index. The following table shows the rates applied for each salary band.

    2019-2020 2018-2019 Actual

    Salary band Actual

    Contribution rate Actual

    Salary band Actual

    Contribution rate £1 - £27,697 7.4% £1 - £27,047 7.4% £27,698 - £37,284 8.6% £27,048 - £36,410 8.6% £37,285 - £44,

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