My honourable friend the Minister of State (Jim Knight) has made the following Written Ministerial Statement.
The Government Actuary has reported on the results of his valuation of the Teachers' Pension Scheme (TPS) as at 31 March 2004. His report, which takes account of the reforms to the TPS that will be introduced on 1 January 2007, including the increase in the contribution rate paid by teachers from 6 per cent to 6.4 per cent, recommends that, from that date, the employer contribution rate for the TPS should increase from the current rate of 13.5 per cent to 14.1 per cent.
The principal factor underlying the increase in the contribution rates relates to continuing improvements in life expectancy compared to the assumptions adopted in the previous valuation. The agreed package of TPS reforms will deliver savings on the employer contribution rate of some £280 million a year compared to the contribution that would have been required if the existing scheme provisions had remained in place. This reform package, which includes an agreement on cost sharing between members and employers of any future changes in the contribution rate and a cap of 14 per cent on the employer rate from the 2008 scheme valuation onwards, should ensure the long-term financial sustainability of the TPS. A copy of the Government Actuary's report has been placed in the House of Commons Library.