Teachers' Pension Scheme Explained — Pension Hub
A complete, plain-English guide to the Teachers' Pension Scheme in England and Wales: how the career average (CARE) scheme works, why it's more valuable than most private pensions, the legacy final-salary schemes, McCloud, Annual Allowance and the pension life-events every teacher hits sooner or later.
Independent guidance, not affiliated with the DfE, Teachers' Pensions or any teaching union.
Almost every teacher in England and Wales has seen a pension deduction on their payslip for their entire career without ever really understanding what it's buying them. That's not a criticism — the Teachers' Pension Scheme (TPS) genuinely is complicated, made more so by the fact that it has effectively changed shape twice in the last two decades, and that three different "generations" of the scheme can all apply to a single teacher's career at once. This hub page is the starting point for making sense of all of it: what the scheme actually is, why it's worth taking seriously, and where to go next depending on what you specifically need to understand.
This hub covers England & Wales
28.68%
Employer contribution rate — most of what funds your pension isn't your own money
1/57th
Accrual rate under the 2015 CARE scheme, added to your pension every single year
CPI + 1.6%
How your built-up pension revalues each year while you're still an active member
Why the Teachers' Pension Scheme is unusually valuable
It's easy to think of a pension as just another payslip deduction, similar in spirit to tax or National Insurance. The Teachers' Pension Scheme is a fundamentally different kind of financial product to what most private-sector employees are offered, and the difference matters more the longer you think about it.
Most private-sector pensions today are defined contribution schemes. You and your employer pay money into a personal pot, that pot is invested in the stock market (or bonds, or a mix), and whatever it's worth when you retire — which depends entirely on investment performance, fees and how long you leave it invested — is what you get. If markets fall sharply the year before you retire, your pension is smaller. There's no guarantee of any particular outcome, and you personally carry all of the investment risk and all of the risk that you might outlive your savings.
The Teachers' Pension Scheme is a defined benefit scheme. Instead of building up a pot of money that depends on the market, you build up a promise: a guaranteed amount of annual income for the rest of your life from your Normal Pension Age, which increases every year in line with inflation. It doesn't matter what the FTSE 100 does the week you retire. It doesn't matter how long you live afterwards — the income keeps coming, every year, for as long as you do. That guarantee is provided by the UK government (the scheme is unfunded and backed by the Exchequer), which is about as solid a guarantee as a pension promise can get.
28.68%
Current employer contribution rate — funded by government, not deducted from your pay
On top of the guarantee itself, the employer contribution rate is remarkable. Your school (or, in practice, the Department for Education via the school's budget) pays 28.68% of your salary into the scheme. That rate has moved twice in recent years — 23.68% from September 2019 (the 2016 valuation), then up to 28.68% from 1 April 2024 (the 2020 valuation) — and Teachers' Pensions confirmed in June 2026 that the 2024 valuation has reported and the rate will fall to 17.68% from 1 April 2027. Whatever the exact figure in a given year, to put it in context: the legal minimum employer contribution to a private-sector workplace pension under auto-enrolment is 3% of a band of "qualifying earnings", and even a genuinely generous private employer offering to match your own contributions pound-for-pound up to, say, 10% would still be contributing well under half of what the TPS employer contribution provides. This money never appears on your payslip and most teachers never think about it, but it is real value being added to your retirement on top of your salary every single month you're in the scheme.
Why opting out is rarely a good idea
How the career average (CARE) scheme actually works, in plain English
Since 1 April 2015, all new pension accrual for teachers in England and Wales has built up under a career average revalued earnings (CARE) scheme. The name sounds technical, but the underlying idea is genuinely simple once you strip away the jargon: instead of your pension being based on your final salary near retirement, it's built up as a running total across your entire career, with each year's contribution to that total protected against inflation along the way.
Here's the mechanism, step by step. Every year you're an active member of the scheme, 1/57th of that year's actual pensionable pay is added to your personal pension pot — not a pot of invested cash, but a running total of guaranteed annual pension income. So if you earned £40,000 in a given year, that year adds £40,000 ÷ 57 = £701.75 to your annual pension entitlement, permanently, regardless of what happens to your pay afterwards. Then, every September, your entire accrued pot — everything you've built up so far, including the amount just added — is revalued upward by the Consumer Prices Index (CPI) plus 1.6 percentage points, to make sure inflation doesn't erode its value while you're still working towards retirement.
A simple example makes this concrete. Imagine a teacher earning £34,000 in their first year in the scheme. That year adds £34,000 ÷ 57 ≈ £596 to their pot. Assuming CPI plus 1.6% works out at roughly 4.5% that year (a reasonable long-run planning assumption, though the real figure varies with actual inflation), their pot is revalued to about £623 by the following September. The next year, if their pay has risen to £34,680, that year adds a further £34,680 ÷ 57 ≈ £608, taking the pot to roughly £1,232 before that year's revaluation lifts it again. Carry this on for a full career — 30, 35, 40 years — and the pot becomes a genuinely substantial guaranteed annual income, built entirely from real, individually-protected slices of each year actually worked.
It's simpler than it sounds — but it rewards understanding it
Three generations of the scheme — and why all three still matter today
One of the most confusing things about the Teachers' Pension Scheme is that, depending on your age and when you started teaching, you may actually have benefits sitting in more than one version of the scheme at once. This isn't a design flaw so much as the natural result of a major reform being introduced partway through many teachers' careers, and it's worth understanding the outline even if the fine detail belongs elsewhere.
The pre-2007 scheme
Teachers who joined before 1 January 2007 built up benefits in the original final-salary scheme, which paid a pension based on 1/80th of final salary for each year of service, plus an automatic tax-free lump sum of three times that pension. Anyone with service from this era who is still teaching today will have that early service permanently protected under these older, final-salary terms.
The 2007 scheme
Teachers who joined between 1 January 2007 and 31 March 2015 (and some later joiners with continuous prior service) built up benefits under a revised final-salary scheme with a more generous 1/60th accrual rate per year of service, but without the automatic lump sum — members could instead choose to give up part of their annual pension to generate one.
The 2015 CARE scheme
From 1 April 2015, the 2015 CARE scheme became the scheme all future accrual builds up in, for every active member — with one significant complication. When the reform was introduced, older members close to retirement were given "transitional protection", letting them stay in their legacy final-salary scheme for several more years. In December 2018, the courts ruled that this transitional protection unlawfully discriminated against younger members on the basis of age, since older colleagues effectively got to stay in the more favourable scheme for longer purely because of when they were born. The fix for this — known as the McCloud remedy — gives every affected member a choice, for their service between April 2015 and March 2022, over which set of scheme rules applies to that specific period. It's a genuinely important issue for anyone who was already teaching before April 2015, but it's also a large enough topic that it has its own dedicated explainer rather than being covered in depth here.
2015–2022
The remedy period covered by the McCloud fix, for anyone teaching before April 2015
Your Benefit Statement — the one document worth checking regularly
It's called a Benefit Statement, not a 'Total Reward Statement'
Teachers' Pensions produces a Benefit Statement for every member with at least two years' pensionable service, available on demand through the "My Pension Online" portal. It's easy to overlook, but it's genuinely the single most useful document for understanding your own retirement position, because unlike any generic calculator, it uses your actual recorded service and actual recorded pay.
It is also not an annual event, which is the second thing that's widely got wrong. If you're an active member, your Benefit Statement is updated every month — you don't wait for a statement to arrive, you log in and look at it whenever you want, and it reflects your position as at the most recent update. If your benefits are deferred, it's updated once a year, normally in May or June. And if you're inside the McCloud remedy population — broadly, members with transitional protection covering service between 2015 and 2022 — what you'll see is a Benefit Statement – RSS instead, which shows both the final salary and the career average versions of that remedy-period service, because you'll have to choose between them at retirement.
2 years
Minimum pensionable service before a Benefit Statement is available at all
A Benefit Statement typically shows:
- Your accrued pension benefits to date, split out by scheme (legacy final-salary and/or 2015 CARE) if you have service in more than one.
- An illustrative projection of what your pension could be worth at your Normal Pension Age, based on assumptions about future pay and service.
- A summary of the death-in-service lump sum and survivor benefits that would apply if you died while an active member.
- The scheme flexibilities available to you, such as additional pension, faster accrual and buy-out.
- Your recorded service history, which is worth checking for gaps or errors — these are far easier to correct while your school's payroll records are recent than years later.
Check it regularly, not just near retirement
Pension life-events: when teachers usually start asking questions
Most teachers don't think hard about their pension until something specific triggers the question. Recognising these moments in advance makes them much less stressful when they arrive.
Leaving teaching
If you leave pensionable teaching employment before Normal Pension Age — whether to change career, take time out, or move abroad — your accrued benefits don't disappear. They become "deferred benefits", preserved in the scheme and still revalued each year in line with the same CPI-plus-1.6% mechanism (though the specific revaluation basis for deferred members can differ slightly from active members — check the current rules), ready to be claimed from your Normal Pension Age.
Moving to part-time
Reducing your hours doesn't reduce your accrued pension — it simply means future years add a smaller amount, based on your actual (pro-rated) pensionable pay for the hours you work. Everything already built up stays exactly as it was.
Maternity, paternity, adoption and shared parental leave
Periods of paid family leave normally continue to count as pensionable service, generally based on the pay you'd have received had you not been on leave (rather than any reduced statutory pay actually received), so your pension accrual isn't penalised for taking family leave on standard terms. Unpaid periods of leave may not accrue in the same way — check your specific circumstances with your school's HR team or Teachers' Pensions.
Ill-health
The scheme provides for ill-health retirement in certain circumstances, with two tiers depending on the severity and permanence of the condition, potentially including an enhancement to reflect prospective future service. This is a genuinely complex area with strict evidential requirements, so if it's relevant to you, go directly to Teachers' Pensions' own ill-health retirement guidance and your school's HR/occupational health process rather than relying on a general summary.
Approaching retirement
As you approach your Normal Pension Age — which, importantly, is your State Pension Age under the 2015 scheme rather than a fixed age like 60 or 65 — it's worth requesting a benefit statement directly from Teachers' Pensions well in advance (most sources suggest around four to six months before you intend to retire), since processing and any final salary checks with your employer take time.
Divorce and pension sharing
A Teachers' Pension is a matrimonial asset that can be shared, attached, or offset during divorce proceedings. Given how substantial the accrued value can be for longer-serving teachers, it's worth requesting a Cash Equivalent Transfer Value (CETV) from Teachers' Pensions early in any separation and taking dedicated financial and legal advice, rather than assuming it will sort itself out informally.
Annual Allowance and McCloud — the two topics that deserve their own pages
Two further topics come up constantly in relation to the TPS, and both are substantial enough to warrant proper dedicated treatment rather than a quick summary here.
The Annual Allowance is a tax charge that can apply if the total value your pension grows by in a single tax year — across all your pension schemes, not just the TPS — exceeds a set limit. Because the value of defined benefit growth is calculated in a specific, non-obvious way (broadly, the increase in your annual pension entitlement multiplied by a factor of 16, plus any increase in an automatic lump sum), teachers who receive a large pay rise, a big TLR, a promotion, or who buy back the effect of the McCloud remedy in one go can unexpectedly trigger an Annual Allowance charge without their gross pay looking unusually high. Our Annual Allowance guide and Annual Allowance calculator cover this in full.
The McCloud remedy addresses the age-discrimination ruling described above, and applies to anyone who was an active TPS member before 1 April 2012 and remained in service through to 1 April 2015 (broadly — the exact eligibility rules have specific edge cases). Eligible members get a choice over whether legacy final-salary rules or 2015 CARE rules apply to their service between April 2015 and March 2022, and Teachers' Pensions is working through remediation calculations for affected members. Our McCloud remedy guide and McCloud remedy calculator walk through what this means and how to think about the choice.
Reading your payslip and your pension side by side
One reason the TPS feels opaque is that almost nothing about it is visible on an ordinary payslip beyond a single contribution line. Your payslip shows your own deduction — one of the six percentages above, applied to your gross pay for that period — and nothing else. It doesn't show the employer contribution, it doesn't show how much your accrued pension grew that month, and it certainly doesn't show a running total of your entitlement. That information only exists on your Benefit Statement and, in more granular form, in your service record held by Teachers' Pensions. It's worth deliberately looking at both documents side by side at least once: the payslip shows the (comparatively small) cost to you each month, and the Benefit Statement shows the (much larger) value actually being built on your behalf. Seeing both together is usually what changes how people feel about the deduction in the first place.
It's also worth understanding that the scheme is unfunded, which is a slightly counter-intuitive but important technical point. Unlike a private pension scheme, there isn't a giant pot of invested assets sitting behind the TPS that could theoretically run out. Contributions from current teachers and employers are used to pay the pensions of people who've already retired, on a pay-as-you-go basis, with the government guaranteeing to make up any shortfall. This is precisely why the promise can be genuinely inflation-linked and guaranteed in a way that a market-dependent, funded scheme generally can't match — the risk sits with the Exchequer rather than with your own retirement pot.
Retiring early or in stages
Retirement doesn't have to mean working full-time right up to your Normal Pension Age and then stopping completely — the scheme has several mechanisms for retiring earlier or gradually, each with real trade-offs that are easy to misunderstand. We've built four dedicated pages covering this properly, because it's a genuinely under-explained corner of the scheme and one of the highest-stakes areas to get wrong, since most of these decisions are permanent once made.
TPS Early Retirement Reduction Factors Explained
The actual GAD reduction tables in readable form — what retiring at 55 instead of 60 or 65 really costs, permanently.
TPS Phased Retirement Explained
Drawing up to 75% of your pension from 55 while still working reduced hours — the 20% earnings-drop rule and how many times you can do it.
Premature Retirement vs Early Retirement
The difference between employer-initiated Premature Retirement and voluntary Early Retirement (AAB) — and who's legally on the hook to top up your pension.
Buy Out and Faster Accrual Explained
What these two lesser-known options actually do — and why Buy Out doesn't help you retire at 55, despite the common assumption.
Six things about your pension almost nobody explains properly
Beyond the mechanics above, there's a cluster of genuinely underexplained topics that come up at specific moments in a teaching career — a death, a divorce, a career break, or simply retirement approaching. Each has a dedicated page below.
Why Your State Pension Is Lower Than Expected
TPS was contracted out of the Additional State Pension until 2016 — and the official forecast service stopped explaining why in 2024.
Death in Service Benefits Explained
The real death grant and survivor pension rules — in service, as a deferred member, or after retirement.
Should You Take the Maximum Lump Sum?
The 12:1 commutation rate explained — and the GAD figures that prove it's fixed by regulation, not actuarially fair.
Opting Out of TPS — and Getting Back In
What an opt-out actually costs beyond the lost contributions, and the five-year rule that can freeze your final salary link.
Your Benefit Statement, Decoded
What every section actually shows — and the things it silently leaves out, like a Scheme Pays election or a pension share order.
Teachers' AVCs Explained
AVCs vs Additional Pension vs Faster Accrual vs a SIPP — and why an AVC's real edge is access before your Normal Pension Age.
New to the scheme, or thinking beyond it?
If you're just starting out, wondering how your pension actually stacks up against the alternative, or thinking about what happens if you leave teaching altogether, these six pages answer the questions the rest of this hub assumes you already know the answer to.
Do Teachers Get a Pension?
Starting from scratch: which scheme applies where, why it's automatic, and what "defined benefit" actually means.
What's the Average Teacher Pension?
The real published figure from TPS's own accounts — and why it's much lower than what a full career actually builds.
Contribution Rates 2026/27, All 3 UK Schemes
The full TPS, STPS and NITPS tier tables in one place, and how your tier is actually decided.
Teachers' Pension vs Private Sector Pension
Defined benefit vs defined contribution, explained factually — including the risk that sits with you, not the scheme, in a DC pot.
Deferred Teachers' Pension Explained
What happens if you leave teaching for good — the two-year vesting line, and how deferred revaluation differs from active.
Transferring Your Teachers' Pension
Transferring in via a Club transfer, and why transferring out to a DC scheme has been banned since 2015.
Topping Up Your Pension After Retirement
Abatement rules if you return to teaching with a pension in payment, and why AVCs and Additional Pension need active membership.
Your Pension When Your School Changes Trust
Why your TPS record survives a MAT-to-MAT transfer intact, and what TUPE does and doesn't protect.
Where to go next
TPS 2015 (CARE) Explained
The full, detailed mechanics of accrual, revaluation, contribution tiers and retirement ages, with worked examples.
Annual Allowance & Tax Charge Explained
Why a pay rise, TLR or promotion can trigger an unexpected pension tax charge — and how to check.
McCloud Remedy Explained
What the age-discrimination ruling means for your 2015–2022 service, and the choice you may be offered.
Teachers' Pension and Divorce
Pension Sharing Orders, Attachment Orders and offsetting explained, and how a CETV valuation actually works.
Ill-Health Retirement Explained
How Tier 1 and Tier 2 ill-health retirement work, what medical evidence is needed, and how the process runs.
Bereavement Payment Changes (2027)
The DfE's consultation on how a deceased teacher's survivor pension is calculated, and who it would affect.
Frequently asked questions
Is the Teachers' Pension Scheme actually better than a private pension? +
For the overwhelming majority of teachers, yes, and it isn't especially close. You get a guaranteed, inflation-linked income for life that doesn't depend on stock market performance, plus a current employer contribution of 28.68% of your salary (due to fall to 17.68% from April 2027 following the 2024 valuation) — a rate very few private-sector employers come anywhere near matching even after that reduction. The trade-off is that you can't control how it's invested and you can't usually access it before your Normal Pension Age without a permanent reduction, but as a vehicle for building a secure retirement income, it's genuinely one of the best pensions still available in the UK.
Am I in the 2015 CARE scheme or an older scheme? +
If you joined teaching for the first time on or after 1 April 2015, all of your service is in the 2015 career average (CARE) scheme. If you were already teaching before that date, you'll typically have a mix: your earlier service sits in whichever legacy final-salary scheme you were in (the pre-2007 or 2007 scheme), your service from April 2015 (or April 2022 for members who had transitional protection) is in the 2015 CARE scheme, and the McCloud remedy governs exactly how your service between 2015 and 2022 gets treated. Your Benefit Statement shows the breakdown — and if you're affected by McCloud, Teachers' Pensions issues a 'Benefit Statement – RSS' instead, which sets out both the final salary and career average options for your 2015–2022 remedy service side by side.
What's the difference between the 2015 scheme and the older final-salary schemes? +
The legacy schemes (pre-2007 and 2007) paid a pension based on your final salary at or near retirement, multiplied by your years of service. The 2015 scheme instead adds up a slice of every single year's actual pay, revalued each year to protect it from inflation — so your whole career counts, not just the last few years. See our full CARE explainer for a detailed, worked comparison of the two approaches.
How much of my salary goes into my pension in total, including my employer's share? +
Your own contribution depends on which of six salary bands you fall into, from 7.4% up to 12% of your full salary. On top of that — invisibly, since it never touches your payslip — your employer pays 28.68% of your salary into the scheme. Added together, most teachers have somewhere between 36% and 40% of their salary going into their pension each year, the large majority of it funded by the employer, not you.
What is a Benefit Statement and where do I find mine? +
It's the statement produced by Teachers' Pensions showing your accrued pension benefits to date, an illustrative projection to your Normal Pension Age, your recorded service history and a summary of your family and death-in-service benefits. You access it on demand through the 'My Pension Online' portal on the Teachers' Pensions website, using the same login you'd use to check your service record. Two details catch people out. First, it isn't an annual mailshot: if you're an active member it's refreshed every month, so you can look at an up-to-date figure whenever you want, while deferred members get theirs updated once a year, normally in May or June. Second, you need at least two years' pensionable service before a Benefit Statement is available at all, so a teacher in their first year or two simply won't have one yet. Note also that the term 'Total Reward Statement' belongs to the NHS Pension Scheme, not the TPS — searching for it on the Teachers' Pensions site will find you nothing.
Can I be a member of the Teachers' Pension Scheme and pay into a separate private pension as well? +
Yes. There's nothing stopping you contributing to a personal pension, a Lifetime ISA, or (if you have separate self-employed or freelance income, such as tutoring or examining) a SIPP alongside your TPS membership. Some teachers do this deliberately for extra flexibility, since TPS benefits can't usually be accessed before your Normal Pension Age without a permanent reduction. Just be aware that total pension contributions across all schemes count towards your Annual Allowance for tax purposes.
What happens to my pension if I leave teaching for a few years and come back? +
Your accrued CARE pension is preserved and continues to be revalued each year even while you're not contributing, so it doesn't lose value in real terms. If you return to pensionable teaching employment later, you generally resume building up further CARE benefits, and depending on the length of the break and current scheme rules, your earlier and later service may be linked together as continuous service rather than treated as two entirely separate pensions. Check with Teachers' Pensions directly if a break is approaching.
Does getting divorced affect my Teachers' Pension? +
It can. A Teachers' Pension is treated as a matrimonial asset and can be subject to a Pension Sharing Order, a Pension Attachment Order, or simply be offset against other assets during divorce proceedings, depending on what a court decides or what's agreed between both parties. Because TPS benefits can be a substantial part of a teacher's overall financial position — often larger in real value than the family home for longer-serving members — it's worth getting a Cash Equivalent Transfer Value (CETV) from Teachers' Pensions early in the process and taking independent financial and legal advice rather than treating it as an afterthought.
Related guides
Teachers' Pension Calculator
Project your CARE pension pot forward year by year.
Annual Allowance Calculator
Check your Pension Input Amount against your Annual Allowance.
McCloud Remedy Calculator
See how the 2015–2022 remedy choice could affect your pension.
Teacher Take-Home Pay Calculator
See exactly how your TPS contribution tier affects your net pay.
Retiring in 2027
Resignation deadlines, when to apply, the April increase and what going early costs.
Teachers' Pension Increase April 2027
What September 2026 CPI means for your pension, teaching, deferred or retired.
Teachers' Pension Tax Code Explained
Why so much tax comes off your pension once the State Pension starts, and how to check your code.
Is a Teachers' Pension Taxable?
Income tax yes, National Insurance no, lump sum tax-free: how much you'll pay in retirement.
TPS Early Retirement Reduction Factors
The real GAD tables behind an early-retirement reduction, in readable form.
Independent School Teachers and the TPS
Why hundreds of independent schools have left the scheme, and what it means if you're considering a move.
Teachers' Pensions: Scotland (STPS) vs England & Wales (TPS)
Two separate schemes, similarly designed but with different contribution tiers and employer rates — and what actually happens to your pension if you move across the border.