Pillar Guide · Updated July 2026
Teachers' Pension Scheme: A Complete Guide for 2026/27
The Teachers' Pension Scheme is one of the largest public sector pensions in the UK, covering hundreds of thousands of state school and academy teachers. This guide explains the career average structure introduced in 2015, the tiered contribution rates for 2026/27, the 1/57th accrual rate, the McCloud remedy recalculation, phased retirement, ill-health and death benefits, and how large pay rises interact with the pension Annual Allowance.
What Is the TPS
The Teachers’ Pension Scheme is a statutory, unfunded, defined benefit pension scheme for teachers employed in state-funded schools, most academies, sixth-form colleges and some independent schools that have opted in, in England and Wales. Being unfunded means contributions are paid to HM Treasury and pensions in payment are met from current taxation rather than investment returns, in contrast to the LGPS.
Since 1 April 2015 the TPS has operated as a career average revalued earnings (CARE) scheme for all new pension accrual, following the wider 2015 public service pension reforms. Scotland and Northern Ireland run their own separate teachers’ pension schemes with broadly similar but not identical structures, not covered in detail here.
Contribution Tiers 2026/27
Employee contributions are set in tiers by full-time equivalent salary, reviewed periodically by the Department for Education. Indicative 2026/27 tiers run from around 7.4% for the lowest salary band, through 8.6%, 9.6%, 10.2%, 11.3%, up to around 11.7% for the highest earners. The actual contribution deducted from a part-time teacher’s pay is based on their actual salary, but which percentage tier applies is determined by their full-time equivalent salary.
The employer contribution rate is 28.6% of pensionable pay, a level set following the 2019 actuarial valuation that significantly increased employer costs. For state schools and most academies, this cost is substantially met through the Department for Education’s Employer Pension Grant, though some independent and opted-in employers must meet the full cost from their own budgets.
CARE Benefits and Accrual
For service since April 2015, each year’s pension accrues at 1/57th of that year’s pensionable pay, revalued while you remain an active member at CPI plus 1.6 percentage points, or at CPI alone once you become a deferred member. This revaluation rate is more generous than many other public service CARE schemes, reflecting negotiations at the time of the 2015 reform.
Teachers who were in service before April 2015 also have a final salary tranche — calculated at 1/60th of final salary per year for 2007 scheme members, or 1/80th plus an automatic lump sum of three times pension for pre-2007 scheme members — for their service up to the 2015 transition date, using salary at eventual retirement or leaving, not salary in 2015. Long-serving teachers therefore often have two or three distinct benefit tranches combined at retirement.
The McCloud Remedy
The 2015 reforms gave teachers within ten years of their existing Normal Pension Age full protection to remain in the legacy final salary scheme, with tapered protection for those slightly further away, while younger teachers moved to CARE immediately. The Court of Appeal found this unlawfully discriminated on age grounds in the McCloud case, and the Public Service Pensions and Judicial Offices Act 2022 requires a remedy for all TPS service in the period 1 April 2015 to 31 March 2022.
The TPS remedy operates as a “deferred choice underpin”: for the remedy period, members who are still active can choose at the point they eventually retire whether the legacy final salary scheme or the CARE scheme applies to that period of service, whichever produces the better outcome. Members who have already retired had this choice applied automatically, with any arrears paid with interest. Teachers who retired, transferred, or died during or shortly after the remedy period should confirm with Teachers’ Pensions that their benefits reflect the remedy calculation.
Normal Pension Age
For career average benefits built up since April 2015, Normal Pension Age is linked to State Pension age, with a minimum of 65. The 2007 final salary scheme tranche generally has a Normal Pension Age of 65, while the earliest, pre-2007 final salary tranche typically has a Normal Pension Age of 60. This means a long-serving teacher can have three tranches of pension maturing at three different ages.
Benefits can be taken early from age 55 (rising to 57 from 2028), but any tranche drawn before its own applicable Normal Pension Age is reduced for early payment using actuarial factors published by the Government Actuary’s Department, reflecting the longer expected payment period.
Phased Retirement
From age 55, a teacher can apply for phased retirement, reducing their pensionable salary by at least 20% — through fewer hours, a lower-graded post, or both — while drawing some of their accrued pension to offset the reduced income, without leaving teaching entirely. Up to two phased retirement claims are permitted over a career, allowing a gradual wind-down before eventual final retirement.
Any pension accessed through phased retirement before the relevant Normal Pension Age is subject to the standard early payment reduction on that portion, while pension continues to accrue on the reduced salary going forward. This makes phased retirement a useful tool for teachers wanting to reduce workload in their final years while beginning to draw an income from their pension.
Tax-Free Lump Sum
The career average scheme has no automatic lump sum — teachers commute part of their annual pension for tax-free cash at the standard rate of £12 lump sum per £1 of pension surrendered, up to the usual 25% maximum of the overall capital value. The pre-2007 final salary tranche, where applicable, carries an automatic lump sum of three times the annual pension from that tranche as standard, on top of which further commutation is possible from the remaining benefit.
All tax-free lump sums across every pension a teacher holds are capped by the Lump Sum Allowance of £268,275 for 2026/27, unless the teacher holds a protected, higher historic allowance from before the 2024 pension tax reforms.
Ill-Health and Death Benefits
Two tiers of ill-health retirement exist: total incapacity benefits, for teachers permanently unable to work in any gainful employment, which pay an enhanced pension calculated as though the teacher had continued to Normal Pension Age; and partial incapacity benefits, for teachers unable to teach but capable of other work, which pay a lower enhancement. Both require supporting medical evidence assessed by Teachers’ Pensions’ appointed medical adviser, and decisions can be appealed.
On death in service, a lump sum death grant of three times salary is typically paid alongside survivor pensions for a spouse, civil partner, or a nominated partner who can demonstrate financial interdependence, plus pensions for dependent children. Death shortly after retirement usually triggers payment of the balance of a five-year pension guarantee if fewer than five years of payments have been made.
Boosting Your Pension
Teachers can buy Additional Pension — a fixed extra amount of annual pension, up to £8,675 for 2026/27, paid as a lump sum or in instalments — or opt for Faster Accrual, increasing the rate at which future career average service builds up from the standard 1/57th to as much as 1/45th, in exchange for a higher ongoing contribution rate on that future service.
An in-house Additional Voluntary Contributions arrangement with Prudential, the TPS’s appointed provider, offers a further, investment-based way to save alongside the guaranteed defined benefit pension, with flexible access at retirement including as further tax-free cash within the overall Lump Sum Allowance.
Annual Allowance
As a defined benefit scheme, the TPS tests the increase in the capital value of your benefits over the tax year — not your contributions — against the £60,000 Annual Allowance for 2026/27. A large pay rise, promotion into leadership, or substantial pensionable allowance can push the pension input amount well above your actual contributions, and this effect compounds for teachers who also accrue benefits in another public service pension such as the NHS scheme concurrently.
Teachers who receive a Pension Savings Statement showing an Annual Allowance breach should consider the Scheme Pays facility, allowing the TPS to settle the resulting tax charge directly in exchange for a permanent, actuarially calculated reduction to future pension — avoiding the need to find a large cash sum to pay HMRC directly.