Teachers Pension Scheme UK 2026: Career Average, Contributions and Benefits

Overview of the Teachers Pension Scheme

The Teachers Pension Scheme (TPS) is one of the UK's largest public sector occupational pension schemes, covering around 750,000 active teachers in England and Wales. It is an unfunded defined benefit scheme -- benefits are paid directly from government funds rather than from an invested pot.

All teachers employed in maintained schools, academies and most other state-funded institutions are automatically members. Many independent schools also participate.

The scheme moved to a Career Average Revalued Earnings (CARE) basis for all members from 1 April 2015. Service built up before that date remains in the final salary arrangements under the old rules.

The 2015 Career Average Scheme

How accrual works

Each year of active membership, you build up a pension credit equal to:

1/57th x your pensionable pay for that year

Each credit is revalued every April by the change in the Consumer Prices Index (CPI), protecting the real value of your pension against inflation. At retirement, you receive the sum of all revalued annual credits.

Comparison with the NHS scheme

The TPS uses a 1/57th accrual rate compared with 1/54th for the NHS 2015 Scheme. This means TPS members build up pension slightly more slowly per pound of pay, but the employer contribution rate (28.68%) is higher than the NHS rate (23.7%), reflecting the overall cost of the benefit package.

Employee contribution rates 2026

Your contribution rate depends on your actual pensionable salary for the year:

Note: these tiers are reviewed periodically. Check Teachers' Pensions (the scheme administrator) for confirmed current year rates.

All contributions qualify for full income tax relief at your marginal rate. A teacher in the 7.4% band who is a basic-rate taxpayer effectively contributes only 5.92% net.

Employer contribution: 28.68%

The employer contribution of 28.68% means that for every £1 of salary a teacher earns, the employer is contributing an additional ~29p to fund the pension benefit. For a teacher on £40,000, the employer pension contribution is over £11,000 per year.

This rate is set following actuarial valuations and has risen substantially over the past decade as longevity and benefit costs have increased.

Normal Pension Age

You can take an actuarially reduced pension from age 55 (rising to 57 in April 2028). The reduction is approximately 3-5% per year below your NPA -- taking your pension 10 years early could reduce it by 30-40%.

Legacy final salary elements

Service before 1 April 2015 is calculated under the old final salary rules. The accrual method depends on when the service was earned:

Pre-April 2007 service (Final Salary 1/80th)

• Pension = years of service / 80 x final average salary.
• Automatic tax-free lump sum = 3 x annual pension (3/80ths of final salary per year).
• Normal Pension Age = 60.

April 2007 to March 2015 service (Career Average 1/60th)

• Pension = years of service / 60 x final average salary.
• No automatic lump sum (but commutation available).
• Normal Pension Age = 65.

Final average salary is typically the best 365 consecutive days of reckonable pay in the last three years.

Why this matters

A teacher with 12 years of pre-2007 service on a final salary of £48,000 would receive:

• Legacy pension: 12/80 x £48,000 = £7,200/year plus £21,600 tax-free lump sum.

This portion is valuable and entirely separate from 2015 Career Average accrual on post-2015 service.

Worked example: teacher on £40,000 with 30 years of service

Assume a teacher who joined in 2025 and works for 30 years at an average pensionable pay (already revalued) of £40,000:

Annual pension = £40,000 / 57 x 30 = £21,053 per year

This is a significant income in retirement. Combined with the full new State Pension (£12,547.60/year in 2026/27), total retirement income would be approximately £33,600/year -- before any tax-free lump sum commutation.

For comparison, a teacher who also had 15 years of pre-2007 service on a final salary of £48,000 would add a further:

• Legacy pension: 15/80 x £48,000 = £9,000/year.
• Legacy lump sum: 3 x £9,000 = £27,000 tax-free.

Combined annual pension: £21,053 + £9,000 = £30,053 (plus the State Pension).

Taking a tax-free lump sum

For 2015 Career Average service, there is no automatic lump sum. However, you can commute part of your pension into a lump sum at a rate published by the scheme actuary (currently 12:1 for the TPS Career Average section, but verify with Teachers' Pensions at retirement as rates can change).

For pre-2007 Final Salary service, a 3/80ths lump sum is paid automatically.

The combined lump sum is limited by the Lump Sum Allowance of £268,275, which replaced the old Lifetime Allowance.

Part-time working

The TPS records service on a full-time equivalent (FTE) basis. If you work 0.6 FTE:

• Your pensionable pay is your actual pay (0.6 x full-time equivalent pay).
• Your 1/57th credit is based on actual pay.
• Your service record shows 0.6 of a year for each calendar year worked.

Effectively, two years at 0.5 FTE counts as one year of full-time service -- which is equivalent in pension terms, since the credits are based on actual pay.

The McCloud remedy

The 2015 reforms moved all public sector teachers to the Career Average scheme. Older teachers were given transitional protection to remain in the final salary scheme for longer -- a policy the courts ruled was unlawful age discrimination.

The remedy gives affected members a deferred choice at retirement. For service between 1 April 2015 and 31 March 2022, you will be shown both:

• Benefits calculated under the legacy final salary rules (1/80th or 1/60th).
• Benefits calculated under the 2015 Career Average rules.

You keep whichever is greater. Teachers' Pensions will provide the comparison when you claim.

Maximising your TPS pension

Keep service records accurate: contact Teachers' Pensions if you believe any period of service is missing, especially after career breaks or moves between schools.

Consider Additional Pension: you can buy extra pension in increments, funded by additional contributions. This adds directly to your Career Average pension.

Understand the actuarial reduction: if you are considering early retirement, request a pension estimate from Teachers' Pensions to see the exact reduction. The closer to NPA you retire, the smaller the penalty.

Combine with other savings: the TPS provides a strong base, but a personal pension or stocks-and-shares ISA can add flexibility for earlier access (before age 57) or for passing wealth to family (pensions are outside the estate for inheritance tax purposes).

Sources

• Teachers' Pensions: Member resources
• Department for Education: TPS employer guide
• HMRC: Public service pension schemes
• HM Treasury: Public Service Pensions and Judicial Offices Act 2022