Teachers’ Pension engagements are a key annual requirement for many schools and academy trusts. Although often referred to as a “Teachers’ Pension audit”, the TP05 is technically an agreed-upon procedures (AUP) engagement, not an audit. Understanding the scope of the work, where responsibilities sit, and how the End of Year Certificate (EOYC) should be prepared can help reduce errors and avoid unnecessary follow-up.
What is a TP05 agreed upon procedures engagement?
The TP05 engagement is an agreed-upon procedures report required by Teachers’ Pensions. Under this type of engagement:
- The procedures are prescribed by Teachers’ Pensions
- The reporting accountant performs those procedures exactly as set out
- No audit opinion or assurance conclusion is provided
- Findings are reported factually, including any exceptions identified
The purpose is to report on the results of specified procedures, rather than to provide broader assurance.
Responsibilities: School or academy VS Payroll provider
A common area of misunderstanding is where responsibility lies between the school or academy trust and the payroll provider.
While payroll providers process payroll and generate reports, ultimate responsibility for Teachers’ Pension data and submissions remains with the employer, i.e. the school or academy trust.
In practice:
Payroll providers typically:
- Process payroll based on information provided
- Apply Teachers’ Pension contribution rates
- Produce payroll reports and EOYC data
Schools and academy trusts are responsible for:
- Ensuring pensionable pay is identified correctly
- Confirming employees are contributing at the correct TPS banding
- Reviewing and approving EOYC figures
- Ensuring submissions to Teachers’ Pensions are complete and accurate
Understanding the EOYC: What should have happened during the year
An important point is that the EOYC should reflect what should have happened during the year, rather than simply reproducing what was processed through payroll.
This means:
- The EOYC is not always a direct extract from payroll reports
- Adjustments may be required where:
- Errors were identified late
- Pensionable pay was treated incorrectly
- Contribution banding was applied incorrectly
- Corrections relate to earlier periods
The TP05 procedures compare payroll data and EOYC figures to Teachers’ Pensions requirements. Where payroll errors exist and are not corrected in the EOYC, those issues are likely to be reported as exceptions.
What do the TP05 procedures cover?
Under the TP05 guidance, the procedures typically include:
- Testing pensionable pay against payroll records
- Checking that employee and employer contributions have been calculated correctly
- Confirming, for employees selected in the sample, that the correct TPS contribution banding has been applied
- Reconciling payroll figures to the EOYC and Teachers’ Pensions submissions
- Reporting any exceptions identified
Common exceptions reported include:
- Incorrect TPS contribution banding applied to employees
- Pensionable pay calculated incorrectly in payroll
- EOYC figures taken directly from payroll without adjustment
- Weak or unclear reconciliations supporting the EOYC
- Section 3 of the EOYC not casting across or agreeing to Section 2 figures
- Inconsistencies between pensionable pay and contribution totals
- Internal EOYC inconsistencies are a frequent cause of reported exceptions and often indicate insufficient review prior to submission.
How schools and trusts can prepare effectively
To help the TP05 engagement run smoothly, schools and academy trusts should:
- Review payroll data for pension accuracy throughout the year
- Check TPS banding when pay changes occur
- Prepare the EOYC based on expected pension outcomes, not just payroll outputs
- Ensure all EOYC sections reconcile and cast correctly
- Retain clear supporting documentation
- Engage early with the reporting accountant
As this is an agreed-upon procedures engagement, any discrepancies or lack of evidence must be reported, even where they appear minor.
If you would like support with your TP05 Teachers’ Pension agreed-upon procedures engagement, or assistance reviewing EOYC calculations and contribution banding reach out to us at the earliest opportunity. Early involvement can help to identify issues sooner.
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