A “considerable reduction” to the amount schools contribute to teachers’ pensions is “highly likely” following a revaluation of the scheme, a minister has revealed.

But teachers’ contributions and pension pots are not expected to be affected by the change.

Schools currently pay a fee equivalent to 28.6 per cent of teachers’ wages every year into the teachers’ pension scheme.

But speaking in the House of Lords yesterday, skills minister Jacqui Smith said the rate is expected to drop significantly amid a review of the amounts paid into public sector schemes.

“[Rates] have gone from 16.48 per cent in 2019 to the current 28.6 per cent,” she said.

“It is highly likely… that there will be a considerable reduction in the average employer contribution rate as a result of that revaluation.”

Any change would come into effect next April and would remain in place for four years.

£12bn lower

Smith noted that the government actuary’s department has written to the Treasury stating the “average employer contribution rate across the unfunded public service pension schemes, of which the TPS is one, is expected to fall significantly”.

Across the schemes “contributions are expected to be over £12 billion lower in 2027-28 than in 2026-27”.

The expected reduction is due to an increase in the SCAPE discount rate, a government assumption used to calculate the value of future pension benefits.

Employee contribution rates of 9.6 per cent on average will not be affected by the change. Pension pots will not be impacted either.

News of the anticipated savings schools will make from the reduced payments comes as the sector waits for the government’s decision on teacher pay from September.

The Department for Education previously said teacher pay should rise by 6.5 per cent between 2026-27 and 2028-29, but admitted schools will have to make cuts to afford such a rise.