The Teachers’ Pension Scheme (TPS) is one of the best pensions available. Here’s how to understand and maximise your benefits.
TPS Overview
Why It’s Valuable
| Feature | Benefit |
|---|---|
| Defined benefit | Guaranteed income |
| Employer contribution | 23.68% of salary |
| Inflation protection | Rises with CPI |
| Death benefits | Family protection |
| Ill-health cover | Early retirement option |
Scheme Structure
| Period | Scheme Type |
|---|---|
| Pre-January 2007 | Final salary (NPA 60) |
| January 2007-2015 | Final salary (NPA 65) |
| Post-April 2015 | Career average (NPA SPA) |
Contribution Rates
Member Contributions 2025/26
| Annual Salary | Contribution Rate |
|---|---|
| Up to £32,135 | 7.4% |
| £32,136 to £43,259 | 8.6% |
| £43,260 to £51,292 | 9.6% |
| £51,293 to £67,189 | 10.2% |
| £67,190 to £81,960 | 11.3% |
| £81,961 and above | 11.7% |
Employer Contribution
| Contribution | Amount |
|---|---|
| Employer rate | 23.68% |
| Total contribution | ~31-35% of salary |
How Your Pension Builds
Career Average (Post-2015)
| Factor | Value |
|---|---|
| Accrual rate | 1/57th per year |
| Based on | Career average earnings |
| Revaluation | CPI + 1.6% |
Calculation Example
| Detail | Figure |
|---|---|
| Career average salary | £45,000 |
| Years of service | 35 |
| Accrual rate | 1/57 |
| Annual pension | £27,632 |
Final Salary (Pre-2015)
| Period | Accrual Rate |
|---|---|
| Pre-2007 service | 1/80th per year |
| 2007-2015 service | 1/60th per year |
Final Salary Calculation
| Detail | Figure |
|---|---|
| Final salary | £50,000 |
| Years (1/80th) | 15 |
| Years (1/60th) | 8 |
| 1/80th pension | £9,375 |
| 1/60th pension | £6,667 |
| Total | £16,042 + career average |
Retirement Age
Normal Pension Age
| Service Period | NPA |
|---|---|
| Post-April 2015 | State Pension Age (67+) |
| 2007-2015 | 65 |
| Pre-2007 | 60 |
Early Retirement
| Option | Impact |
|---|---|
| Take pension before NPA | Actuarial reduction |
| Approximately | 5% per year early |
| Minimum age | 55 (rising to 57 from 2028) |
Early Retirement Example
| Factor | Value |
|---|---|
| Pension at NPA 67 | £25,000 |
| Taking at 60 | 7 years early |
| Reduction | ~28% |
| Actual pension | ~£18,000 |
Actuarial Reduction
| Years Early | Approximate Reduction |
|---|---|
| 1 year | 5% |
| 2 years | 10% |
| 3 years | 15% |
| 5 years | 23% |
| 7 years | 30% |
McCloud Remedy
Background
| Issue | Explanation |
|---|---|
| 2015 scheme changes | Some teachers had protection |
| Found discriminatory | Age-based protection unfair |
| Remedy required | Choice at retirement |
Affected Members
| You’re Affected If | Status |
|---|---|
| TPS member before April 2012 | Yes |
| Service between 2015-2022 | Affected |
| Joined after April 2012 | Not affected |
What Happens
| At Retirement | Process |
|---|---|
| Automatic calculation | Both ways |
| Choose better option | For 2015-2022 |
| No action needed now | Wait until retirement |
Taking Your Pension
Options
| Option | Description |
|---|---|
| Full pension | Maximum annual income |
| Lump sum exchange | Reduce pension for cash |
| Phased retirement | Continue working, draw pension |
| Defer | Delay for higher pension |
Lump Sum Commutation
| Factor | Details |
|---|---|
| Exchange rate | £1 pension = £12 lump sum |
| Maximum | 25% of pension capital value |
| Tax-free | Lump sum not taxed |
Is Lump Sum Worth It?
| Consideration | Analysis |
|---|---|
| Break-even point | ~12 years |
| Long life expectancy | Keep pension |
| Need for cash | Take lump sum |
| Other income sources | Consider flexibility |
Phased Retirement
How It Works
| Feature | Details |
|---|---|
| Reduce working hours | Keep working part-time |
| Draw some pension | While still accruing more |
| Flexible transition | Into retirement |
Requirements
| Requirement | Details |
|---|---|
| Employer agreement | Must approve |
| Minimum reduction | 20% earnings |
| Age | Any age eligibility |
Death Benefits
Death in Service
| Benefit | Amount |
|---|---|
| Death grant | 3x salary |
| Survivor pension | Up to 37.5% of pension |
| Children’s pension | If applicable |
Death After Retirement
| Benefit | Amount |
|---|---|
| Survivor pension | 37.5% of pension |
| Short-term pension | 3 months full pension |
| Children’s pension | If applicable |
Nomination
| Action | Why Important |
|---|---|
| Complete nomination form | For death grant |
| Update after changes | Marriage, divorce, etc. |
| Online via TPS | www.teacherspensions.co.uk |
Ill-Health Retirement
Total Incapacity
| Level | Enhancement |
|---|---|
| Total incapacity | Service enhanced to NPA |
| Substantially increased pension | Immediate payment |
Partial Incapacity
| Level | Enhancement |
|---|---|
| Partial incapacity | 25% of prospective service |
| Lower enhancement | But immediate payment |
Process
| Step | Action |
|---|---|
| 1 | Employer application |
| 2 | Medical assessment |
| 3 | TPS decision |
| 4 | Payment begins |
Understanding Your Statement
Annual Benefit Statement
| Item | Meaning |
|---|---|
| Normal Pension Age | When you can draw full pension |
| Prospective pension | If you stayed to NPA |
| Current pension | Based on service to date |
| CETV | Cash equivalent transfer value |
Where to Access
| Resource | Location |
|---|---|
| My Pension Online | www.teacherspensions.co.uk |
| Annual statement | Posted/emailed |
| Retirement modeller | Online tool |
Part-Time and Supply Teachers
Part-Time
| Factor | Details |
|---|---|
| Pensionable pay | Actual pay received |
| Full-time equivalent | Used for tiers |
| Service | Calendar years (pro-rata accrual) |
Supply Teachers
| Situation | Treatment |
|---|---|
| Through agency | May not be TPS |
| Direct with school | Should be TPS |
| Check contract | Pension arrangements |
Gaps in Service
| Impact | Details |
|---|---|
| Break in service | No pension accrual |
| Re-employment | Rejoin scheme |
| Previous service | Still counts |
Additional Contributions
Faster Accrual
| Feature | Details |
|---|---|
| Buy extra pension | Additional contributions |
| Maximum | £7,598/year (2025/26) |
| Increase pension | Higher retirement income |
Additional Pension
| Cost | Example |
|---|---|
| Depends on age | Younger = cheaper |
| £1 extra pension | Costs £17-25 |
| Tax relief | At marginal rate |
Common Questions
Leaving Teaching
| Option | Process |
|---|---|
| Deferred pension | Kept in TPS until retirement |
| Transfer out | Move to new employer scheme |
| Cash refund | Only if under 2 years service |
Returning to Teaching
| Situation | Treatment |
|---|---|
| Rejoin TPS | Automatic if employed |
| Previous service | Still counts |
| Different section | May have multiple records |
Divorce
| Impact | Details |
|---|---|
| Pension sharing possible | Court order required |
| Affects retirement income | Pension may be split |
| Get advice | Complex area |
Summary
| Key Point | Details |
|---|---|
| Accrual rate | 1/57 (career average) |
| Employer contribution | 23.68% |
| NPA | State Pension Age (new service) |
| Lump sum exchange | £1 = £12 |
| Death in service | 3x salary + survivor pension |
| Action | When |
|---|---|
| Check online account | Annually |
| Update nominations | After life changes |
| Use retirement modeller | Before decisions |
| Understand McCloud | Nearer retirement |