Answers · UK 2025/26

How does the Teachers’ Pension Scheme work?

The Teachers' Pension Scheme is a career average defined benefit scheme for teachers in England and Wales, building up 1/57th of your pensionable salary each year, revalued annually with CPI plus 1.6%. Anyone who started teaching, or was still teaching, after the 2015 reforms is now in the career average scheme, following a 2022 remedy that addressed age discrimination in the earlier transition.

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The Teachers' Pension Scheme (TPS) provides a defined benefit pension for teachers employed in state schools, sixth-form colleges, and some independent schools in England and Wales, administered by Teachers' Pensions on behalf of the Department for Education. **Career average build-up** Since the 2015 reforms, TPS members build up pension at a rate of 1/57th of their pensionable salary for each year worked, credited to a notional pot that is revalued each September in line with CPI plus 1.6%, which is more generous revaluation than most private sector career average schemes offer. **The McCloud remedy** Because the 2015 transition to career average pensions protected older members (who stayed in the final salary scheme longer) but not younger members, the courts found this amounted to unlawful age discrimination -- the 'McCloud' case. As a result, eligible members now have their pensionable service between April 2015 and March 2022 automatically treated as final salary or career average, whichever gives the better outcome, with no action generally required from most members as this remedy period was applied automatically. **Contribution rates** Teacher contribution rates are tiered based on salary, typically ranging from around 7.4% at the lowest band up to around 11.7% for the highest earners, deducted before tax so you receive automatic tax relief. **Normal Pension Age** For career average members, Normal Pension Age matches your State Pension age, whereas final salary members (those who joined before 2007, broadly) may have a Normal Pension Age of 60. Taking your pension early results in actuarial reductions; taking it later increases it. **Lump sum and lump sum allowance** As with most modern public sector schemes, there's no automatic lump sum in the career average scheme -- you can commute pension for a tax-free lump sum at a rate of £12 for every £1 of pension given up, subject to the standard Lump Sum Allowance of £268,275. **Additional Pension and AVCs** Teachers can boost their pension by buying 'Additional Pension' directly from Teachers' Pensions, or by paying into a separate Additional Voluntary Contributions (AVC) scheme, giving flexibility for those wanting extra retirement income beyond the core scheme. **Practical tip** Use the Teachers' Pensions online portal to check your annual benefit statement, confirm which McCloud remedy period arrangement applies to you, and model different retirement ages before making decisions about when to draw your pension.