Teachers' Scheme Review
Proposed Reforms for the Teachers Superannuation Order 2011
In 2014 Tynwald passed a motion that expressed concern over the continued rising cost and liabilities of public sector pensions and called upon the PSPA to undertake a valuation of the schemes and report back to Tynwald in December 2014, on the feasibility of implementing further cost sharing and other measures, to reduce the long term liability and provide for a sustainable and fair pension scheme. A Working Group was duly set up and it produced the Public Sector Joint Working Group Report – Fairness and Sustainability along with supporting documents. The report made recommendations to reduce the long-term liabilities and increase contributions in order to make public sector schemes more sustainable in the future. The PSPA have negotiated and consulted with the Department of Education, Sport and Culture, Teachers, lecturers and their respective Trade Unions and have agreed on reforms for the Scheme in order to put the Scheme onto a more sustainable basis for the future.
Consultation on the Teachers’ Superannuation Order (Amendment) Order 2018
Consultation on the Teachers' Superannuation (Amendment) Scheme 2018 ran for 6 weeks and closed on the 3 April 2018. The PSPA considered the responses to the consultation and concluded to make the Teachers' Superannuation (Amendment) Order Scheme for approval by Tynwald in October 2018.
Copies of all consultation documents can be viewed here:
As a result of this, the Teachers Superannuation (Amendment) Scheme 2018 is made from the 1 November 2018.
As a result of this, the Teachers Superannuation Order 2011 will be amended from 1 November 2018 as follows:
- From 1 November 2018 new pension provisions will be based upon a reduced accrual rates of:
- For Active Members of the Teachers’ Scheme on 31 October 2018:
- Pre 1 January 2007 Joiners: a reduction in the rate at which pension benefits are built up on and after 1 November 2018 from 1/80th to 1/83rd for each year of pensionable service.
- Post 1 January 2007 Joiners: a reduction in the rate at which pension benefits are built up on and after 1 November 2018 from 1/60th to 1/62.5 for each year of pensionable service.
- For New Members on or after 1 November 2018:
- The rate at which pension benefits are built up will be 1/62.5 for each year of pensionable service
- From 1 November 2018 there is the option for members to take a larger tax free lump sum of up to 30% (currently limited to 25%) of the value of the pension by exchanging part of pension, as permitted by Income Tax Regulations. For members who chose to take a larger lump sum there is likely to be a further actuarial saving over and above the 1% due to the cost saving of future pension being given up in return for the initial higher lump sum. In addition, the proposed legislation seeks to apply a number of administrative amendments which make technical corrections and refinements to both improve the operation of scheme.