The Teachers Pension Scheme (TPS) is the second-largest UK public-sector defined-benefit pension after NHS. It serves around 700,000 active members across state and many independent schools. Like the NHS scheme, TPS uses tiered contributions, the 2015 CARE structure, and is working through the McCloud remedy. This guide covers the 2026/27 position.
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At a glance
- Type: Defined Benefit (CARE - Career Average Revalued Earnings since 2015).
- Accrual rate: 1/57th of pensionable pay per year (slightly less generous than NHS 1/54th).
- Revaluation: CPI + 1.6% during active service (slightly more than NHS).
- Employer contribution: 28.6% of pensionable pay (raised from 23.68% in 2024).
- Employee contribution: tiered 7.4% to 11.7% based on actual annual earnings.
- Normal Pension Age: linked to State Pension Age (currently 66/67).
Contribution tiers (2025/26)
| Pensionable salary | Contribution rate |
|---|---|
| Up to £33,569 | 7.4% |
| £33,570 to £45,187 | 8.6% |
| £45,188 to £53,578 | 9.6% |
| £53,579 to £71,005 | 10.2% |
| £71,006 to £96,841 | 11.3% |
| Above £96,842 | 11.7% |
As with NHS Pension, the whole earnings are charged at the tier rate - not just the slice above the threshold. The tier breakpoints rise with the annual STPCD pay increase.
The 2015 CARE scheme
Same architecture as NHS but with slightly different numbers:
- Accrual rate 1/57th vs NHS 1/54th - meaning each year of pensionable pay adds slightly less to your eventual pension.
- Revaluation CPI + 1.6% during service vs NHS CPI + 1.5% - meaning slightly faster growth on accrued pension.
A teacher earning £40,000 pensionable pay accrues £701/year of pension (£40,000 ÷ 57). Across 30 years averaging £40,000, that's a £21,030/year pension at retirement - broadly comparable to the NHS equivalent because of the slightly higher revaluation rate.
The McCloud remedy
The same 2018 McCloud judgment that affected NHS staff also applies to TPS. The 2022 Act remedy gives affected members a choice at retirement between:
- Their legacy scheme (Final Salary 80ths or 60ths depending on age) for the remedy period (1 April 2015 to 31 March 2022), OR
- 2015 CARE for the same period.
Members who were active on 31 March 2012 are affected. The choice is made at retirement, not now. Teachers Pensions is issuing Remedial Service Statements (RSS) showing both options.
Annual Allowance - the senior leadership problem
Senior teachers (Headteachers, Deputy Heads, Leading Practitioners on the upper Leadership Pay Range) routinely face Annual Allowance issues:
- A Headteacher on £80,000 with a £10,000 pay rise sees a substantial PIA increase - the inflation-adjusted accrued benefit grows by 16 × the increase.
- High-CPI years multiply the PIA across all teachers' accrued benefits, occasionally pushing higher earners over the £60,000 standard AA.
For most teachers below the Leadership Pay Range, AA is not a concern - the annual PIA stays well within £60,000. For Heads and senior school leaders, Scheme Pays (where the scheme settles your AA charge from your pension entitlement) is the standard mechanism.
Phased and flexible retirement
TPS allows two retirement flexibilities not available in many private DB schemes:
Phased retirement
You can take partial pension (up to 75% of accrued pension) while continuing to teach at reduced hours/responsibilities (up to a 20% reduction in pensionable pay). You can do this twice before final retirement - useful for transitioning out of full-time teaching.
Late retirement enhancement
If you continue contributing past your Normal Pension Age (NPA), your pension is enhanced. The enhancement is actuarially calculated based on age and accrued benefits.
Re-employment after retirement
You can return to teaching after retirement and continue receiving your pension, subject to abatement rules. Most retired teachers can return to supply teaching without abatement; full-time return triggers more complex rules.
Common opt-out scenarios
Teachers sometimes opt out for:
- Cashflow during early career - the 7.4% contribution on £31,650 (M1) is £2,342/year off take-home (around £180/month after tax relief).
- Heavy AA charges at the senior end (less common than NHS Consultants but happens with rapid promotion through Leadership scales).
- Plan to leave teaching within 2 years - the value of accrual is small over short periods.
For most teachers under £60,000, staying in TPS is the right financial call. The employer contribution alone (28.6% of pay) is one of the most valuable features of teaching as a profession.
How TPS shows on your payslip
A correctly-structured teacher payslip shows:
- Pensionable pay - basic + TLR allowances + SEN allowance (most allowances ARE pensionable).
- Pension contribution - the tier % of pensionable pay deducted before income tax (net pay arrangement).
- Teachers Pension reference number - your unique TPS membership number.
The pension deduction reduces your gross pay for income tax purposes, giving automatic tax relief at your marginal rate.
TLR allowances and pension
TLR (Teaching and Learning Responsibility) allowances ARE pensionable. So is SEN allowance. The TLR you receive becomes part of your pensionable pay for that year - adding to your CARE accrual.
This makes TLRs particularly valuable for retirement planning. A £5,000 TLR sustained over 10 years adds substantially to your eventual pension via the CARE accrual mechanism.
State Pension interaction
The Teachers Pension is separate from your State Pension. As a TPS member, you also build State Pension qualifying years through your Class 1 National Insurance contributions (7.4%-11.7% of pensionable pay deducted before tax doesn't affect your NI contribution).
State Pension qualifying year requires earnings above the Lower Earnings Limit (£6,396 in 2026/27). Most teachers easily exceed this and accrue qualifying years toward the 35 needed for full new State Pension.
When to talk to a pension specialist
The TPS opt-out math is usually clear (stay in unless you have very specific reasons). Complexity arises around:
- McCloud remedy choice at or near retirement.
- AA charges for senior leaders (Heads on the upper Leadership Pay Range).
- Phased retirement planning - when to start, how much to draw, employment alongside.
- Pension transfer-out decisions - usually wrong, but sometimes considered after leaving teaching for the private sector.
For administrative information, Teachers Pensions (the scheme administrator) provides member services at teacherspensions.co.uk. For regulated advice, an FCA-authorised pension adviser experienced with public-sector DB schemes is essential.
Disclaimer
PayslipIQ provides automated educational guidance based on the figures you supply. It is not regulated pension or financial advice. Teachers Pension Scheme rules are technical - for substantial decisions especially around McCloud remedy, AA charges, phased retirement, or transfer-out, consult a regulated FCA-authorised pension adviser experienced with public-sector schemes.
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