The Teachers’ Pensions Regulations 2010

PART 12Finance

Teachers’ Pension Budgeting and Valuation Account

125.—(1) An account in a form approved by the Treasury is to be prepared by the Secretary of State for every financial year starting with the financial year ending 31st March 2011.

(2) The account shall be open to examination by the Comptroller and Auditor General.

Receipts etc. to be credited

126.—(1) Employees’ and employers’ contributions received during the financial year are to be credited to the account.

(2) Employees’ contributions comprise—

(a)all contributions payable under regulations 12(13)(c), 18, 19, Schedule 4, Schedule 5, under Schedules 4 and 5 of TPR 1997 and under paragraph 36 of Schedule 10 to TPR 1997,

(b)the contributions referred to in regulation 28(3)(c),

(c)so much of any additional contributions payable under regulation C9 of TPR 1997 as would have been payable under regulation 18 if pensionable employment had continued,

(d)all amounts payable under regulation 25 and under regulations C16(5) to (7) and C17 of TPR 1997 (return of repaid contributions).

(3) Employers’ contributions comprise—

(a)the contributions payable under regulation 27 and under regulation G6 of TPR 1997,

(b)so much of any additional contributions payable under regulation C9 of TPR 1997 as would have been payable under regulation 27 if pensionable employment had continued.

(4) There are also to be credited to the account—

(a)the closing balance in the account for the preceding financial year,

(b)all transfer values accepted during the financial year,

(c)all contributions equivalent premiums refunded, or recovered under section 61 of PSA 1993, during the financial year,

(d)any interest and other payments under these Regulations received during the financial year, and

(e)the notional investment income for the financial year on the balance in the account.

(5) For the purposes of paragraph (4)(e), the notional investment income for each financial year is to be determined by the scheme actuary and derived using a percentage return as specified from time to time by the Treasury.

Payments to be debited

127.  There are to be debited to the account all sums paid during the financial year by way of—

(a)benefits under Parts 7 to 10,

(b)payments under paragraph 12 of Schedule 10 to TPR 1997 (equivalent pension benefits) (which continues to have effect by virtue of paragraph 23 of Schedule 13),

(c)repayment of contributions (including interest) under regulation 22 and under regulation C14 of TPR 1997 (which continues to have effect by virtue of paragraph 13 of Schedule 13),

(d)cash equivalents and transfer values,

(e)contributions equivalent premiums, and

(f)increases payable under PIA 1971.

Actuarial review

128.—(1) The scheme actuary must from time to time, make an actuarial review on the position in relation to the account as at the date determined by the Secretary of State (“the review date”)and make a report on the review to the Secretary of State.

(2) In making a determination under paragraph (1) the Secretary of State is to secure that—

(a)the next review date is no later than 31st March 2012, and

(b)the review date for each subsequent report is no later than 4 years after the previous review date.

(3) The Secretary of State is to determine the funding methodology to be used in making the actuarial review after taking advice from the scheme actuary.

(4) The report referred to in paragraph (1) is to specify the standard contribution rate at which contributions should be paid during the period beginning and ending on days (following the date of the report) determined by the Secretary of State (“the contribution period”).

(5) The report is to state the amount by which, at the review date, the value of the scheme assets exceeded or fell short of that of the scheme liabilities.

(6) The scheme assets and the scheme liabilities shall be determined in accordance with the funding methodology specified in paragraph (3).

(7) If the report states that the value of the scheme liabilities exceeded that of the scheme assets, it is to specify a rate at which, during the contribution period, supplementary contributions should be paid so as to remove the deficiency within the period of 15 years beginning on the first day of the contribution period.

(8) If the report states that the value of the scheme assets exceeded that of the scheme liabilities, it is to specify the amount by which the standard contribution rate referred to in paragraph (4) should be reduced during the contribution period, so as to remove the surplus within the period of 15 years beginning on the first day of the contribution period.

(9) The Secretary of State may determine that, having regard to the level of benefits likely to be received, there should be different contribution rates for employees whose contributable salary exceeds any amount specified by the Secretary of State (“a threshold amount”), and, if so, in the case of persons whose contributable salary exceeds a threshold amount—

(a)whether the rate of contribution appropriate to a contributable salary of any amount should apply to the whole of the person’s contributable salary, or

(b)whether the rate of contribution appropriate to a contributable salary of any amount should apply only to that part of it which exceeds the threshold amount.

(10) If a determination referred to in paragraph (9) is made—

(a)the Secretary of State shall notify the scheme actuary accordingly, and

(b)the report is to contain a recommendation as to what the contribution rates should be.

(11) More than one threshold amount may be specified in a determination referred to in paragraph (9) and accordingly more than one corresponding rate may be specified in a recommendation such as is referred to in paragraph (10)(b).

(12) The rates referred to in paragraphs (4), (7), (8), (9) and (10)(b) are to be expressed as a percentage of the contributable salaries (or where appropriate the relevant parts of contributable salaries) from time to time of persons in pensionable employment and the percentage must be a multiple of 0.05.

(13) Any determination made by the Secretary of State for the purpose of this regulation shall be made with the consent of the Treasury.

Meaning of “standard rate” of interest

129.—(1) Where, under any provision of these regulations, interest is required to be paid at the standard rate, the interest is calculated in accordance with this Regulation.

(2) During any financial year the rate of interest is ((RI-RE)/RE x 100)+3.5 % per year, where—

• RI is the retail prices index for September in the previous financial year, and

• RE is the retail prices index for September in the financial year before the one referred to in the definition of RI

but if RI is lower than RE the rate of interest is 3.5% per year.

(3) Interest is compounded with monthly rests.