Committee publication · Estimate memoranda · 29 April 2026
Teachers’ Pension Scheme Main Estimate Memorandum 2026-27
From: Education Committee
Summary
The Teachers' Pension Scheme Main Estimate for 2026-27 requests £9,007.5 million in Resource Annually Managed Expenditure (R-AME) and £1,053.1 million net cash, representing reductions of £800.5 million (8.2%) and £110.7 million (9.5%) respectively from 2025-26. The decrease is driven primarily by a falling Current Service Cost rate (from 22.2% to 18.9%) and rising contributions from pay awards, partially offset by higher interest costs on scheme liabilities.
Key findings
- Resource AME sought is £9,007.5 million, down £800.5 million (8.2%) from 2025-26, chiefly due to Current Service Cost reduction of £932 million offset by Interest on Scheme Liability increase of £498 million
- Current Service Cost rate decreases from 22.2% to 18.9% as prescribed by the Scheme Actuary; underlying pay bill rises from 5.5% pay award (September 2024) and 4.0% uplift (September 2025) with further 1.7% forecast for September 2026
- Scheme liabilities forecast to fall from £290.7 billion (April 2025) to £277.2 billion (April 2026); interest rate on liabilities increases from 5.15% to 5.60%
- Net cash requirement £1,053.1 million, down £110.7 million (9.5%), driven by £354 million increase in contribution receipts partly offset by increased benefit payments including Public Service Pension Remedy (McCloud-Sargeant) adjustments
- Administration costs forecast at £46 million with employer charge of £26.6 million (0.08% of pensionable pay bill); temporary shortfall expected due to administration contract transition to new provider in late 2026
Tone
ProceduralTopics
Key actors
Teachers' Pension Scheme, Scheme Actuary, Government Actuary's Department (GAD), Prudential, Susan Acland-Hood, Secretary of State for Education, House of Commons Scrutiny Unit
Notable line
“The R-AME sought under the TPS Estimate is essentially the amount by which liabilities under the Scheme are estimated to increase during the year, less the contributions paid by employers and employees towards those liabilities.”
Key Quotes
“The TPS budgets are not subject to pre-set Departmental Expenditure Limit (DEL) control totals; they sit within a category of spending known as Resource Annually Managed Expenditure (R-AME), which can be revised and reforecast regularly.”
“The main factors that have decreased the resource request: o There is a £431 million decrease in Resource expenditure arising primarily from a decrease in the Current Service Cost of £932 million offset by an increase in the Interest on Scheme Liability of £498 million o The Current Service …”
“R-AME has fallen significantly since 2022-23 because of changes in the Current Service Cost rate prescribed by the Scheme Actuary. The most significant reduction was in 2023-24, which fell to 27.3% from 83.7% in 2022-23.”
“The costs of administering the scheme are funded via a charge to employers and is currently 0.08% of their pensionable pay bill. The costs of administration are forecast to be £46 million with the expected charge to employers being £26.6 million.”
Source · parliament.uk record ↗