Teachers' Pension Scheme 2015 (CARE) Explained

Since 1 April 2015, every teacher in England and Wales has built up new pension benefits under a career average revalued earnings (CARE) scheme — a fundamentally different design from the final-salary schemes that came before it. This page is a full, detailed explanation of exactly how that scheme works: how your pension pot is actually calculated year by year, why the six contribution tiers behave the way they do, what your Normal Pension Age really means, and what happens at the various points a career doesn't go in a straight line — leaving teaching, going part-time, ill-health, and retiring early or late.

What "career average revalued earnings" actually means

The name is a mouthful, but it describes exactly what happens, in order. Career average means your pension is built from a slice of pay taken from every year of your career, not just your final salary. Revalued means each of those slices is protected against inflation every year between when it's earned and when you eventually retire. Earnings means it's based on your actual pensionable pay each year — salary, TLRs, SEN allowances and other regular additions — not a notional or averaged figure.

This is a genuinely different design from a final-salary scheme, and the difference is easiest to see with a direct, side-by-side comparison. A final-salary scheme calculates your pension using a single number — your salary at (or averaged over) the final one to three years before retirement — multiplied by your total years of service and an accrual fraction (commonly 1/80th or 1/60th in the schemes that used to apply to teachers). Every year of your career is retrospectively valued at whatever your salary happened to be right at the end, regardless of what you actually earned at the time.

Worked comparison: two very different careers

Most simple explanations of CARE versus final salary assume final salary is always the more generous option. That's often true for a "typical" steadily rising career, but it isn't a rule — it depends entirely on the shape of your pay over time. The two examples below use simplified, illustrative accrual rates (ignoring the compounding effect of annual revaluation for clarity) purely to demonstrate the mechanism; they are not a prediction of any real pension outcome.

Teacher A ends up slightly better off under CARE than under an illustrative final-salary comparison, because their high-earning Deputy Head years are captured and protected at their true value, rather than being erased by a lower final salary. Teacher B, despite building a much larger CARE pension in absolute terms than Teacher A, ends up dramatically worse off relative to what a final-salary scheme would have paid them, because final salary would have uplifted all 30 years of their career to their final £95,000 Head Teacher salary, while CARE only ever counts each year at what they actually earned in it.

The 1/57th accrual mechanic in full, with a year-by-year worked example

Setting comparisons aside, here is exactly what happens inside the 2015 scheme each year you're an active member.

1. Your pensionable pay for the scheme year (broadly, the school year running to 31 March or the pay year used by your employer) is recorded.
2. 1/57th of that pay is calculated and added to your accrued pension pot — this addition is itself an amount of annual pension, not a cash sum invested anywhere.
3. At the end of September following that scheme year, your entire pot — everything built up in all previous years, plus the amount just added — is revalued upward by CPI plus 1.6 percentage points.
4. The process repeats every year you remain an active member, with each year's addition based on that year's own actual pay.

Because every year's addition and every year's revaluation happen independently, your accrued pension at any point in time is simply the sum of every year worked, each protected against inflation from the point it was earned. The table below shows this in full for a hypothetical teacher starting on £34,000, with 2% assumed annual pay growth and a 4.5% assumed annual revaluation rate (an illustrative long-run CPI-plus-1.6% planning assumption — the real rate varies with actual CPI each year).

After just five years, this teacher has already built up a guaranteed annual pension of around £3,543 — and that figure itself keeps being revalued for inflation every year afterwards, even in years they don't add any further service. Extend this same pattern across a 35- or 40-year career and the accrued pension becomes a substantial, genuinely guaranteed retirement income, built entirely from real service actually worked.

The six contribution tiers, reproduced in full

What you personally pay into the scheme is set by six salary-based contribution tiers, based on your full annual pensionable pay (salary plus any TLR, SEN allowance or similar regular addition):

Banded, not marginal — and why that creates a cliff-edge

Unlike income tax, where only the portion of income above each threshold is taxed at the higher rate, TPS contribution tiers apply to your entire salary once you cross into a new band. There's no tapering and no "just the excess" calculation. This creates a genuine cliff-edge right at each of the five thresholds, where a small pay increase can trigger a disproportionately larger jump in contributions.

This banded structure is a genuine, if minor, planning consideration around pay rises, TLR negotiations and moves between pay scales that happen to sit close to one of the five boundaries. It rarely makes a pay rise not worth taking, but it's worth knowing about so an unexpectedly small change in take-home pay after a raise doesn't come as a surprise.

The 28.68% employer contribution — what it means in real terms

Set at the 2020 valuation and in effect since September 2019, the employer contribution rate of 28.68% of salary is paid by your school (funded via the Department for Education) into the scheme on top of your own contribution, and never appears as a deduction on your payslip. It's easy to overlook something you never see leave your bank account, but it is real, substantial value added to your retirement every year you're an active member.

Notice that in every case, the employer's contribution is more than double the member's own, often close to three or four times as much once you factor in the exact tier. Compare this to the wider private sector, where the legal minimum employer auto-enrolment contribution is currently 3% of a band of qualifying earnings, and even an unusually generous employer offering to match employee contributions pound-for-pound up to 10% would still be contributing well under half of what the TPS employer rate provides.

What it would cost to replicate this yourself

It's worth asking what it would actually take to build an equivalent guarantee through personal saving alone. The TPS promise isn't just "money saved" — it's a guaranteed, inflation-linked income for life, which is precisely the kind of product that's extremely expensive to buy in the open market. Financial advisers commonly point out that purchasing a similar guaranteed, index-linked annuity income privately can require a pension pot in the region of 25 to 30 times the annual income you want it to provide, given typical annuity pricing. Building a pot of that size from personal contributions and investment growth alone — bearing all of the market risk yourself, with no guarantee at any point along the way — would typically require saving considerably more than 28.68% of your salary every year for a full career, since none of your own investment returns are guaranteed to keep pace with either inflation or the returns implicitly built into the TPS promise. This is the clearest way to see why the employer contribution rate matters so much more than its headline percentage might suggest.

Normal Pension Age: why it's your State Pension Age, not a fixed number

Perhaps the single biggest structural difference between the 2015 scheme and the legacy final-salary schemes is the Normal Pension Age (NPA) — the age at which you can take your full pension without any reduction. The legacy schemes had fixed Normal Pension Ages: 60 in the pre-2007 scheme, 65 in the 2007 scheme. The 2015 CARE scheme instead links your Normal Pension Age directly to your State Pension Age, whatever that turns out to be for you.

This matters enormously depending on your age today. A teacher in their 50s now likely has a State Pension Age, and therefore a TPS Normal Pension Age, of 66 or 67 — not dramatically different from the old fixed ages. A teacher currently in their 20s or early 30s, however, is likely to have a State Pension Age of 68 or potentially higher once future government reviews (which are legally required to reconsider State Pension Age periodically against rising life expectancy) are taken into account. In practice, this means younger teachers today should plan around a meaningfully later retirement age than teachers a generation or two ahead of them, and shouldn't assume "67" or any other specific figure without checking their own State Pension Age directly via GOV.UK, since it depends on exact date of birth.

Taking benefits early: actuarial reduction

You can choose to take your CARE pension from age 55 (rising to 57 from 2028) if you meet minimum qualifying criteria, without needing to be in ill health — but doing so before your Normal Pension Age means your benefits are permanently reduced. The reduction is calculated using actuarial factors set by the scheme actuary, designed to broadly reflect the fact that a pension taken earlier will, statistically, be paid out for more years. The earlier before your Normal Pension Age you take it, the larger the percentage reduction — and because the reduction is permanent for the rest of your retirement, it's worth requesting exact, up-to-date factors from Teachers' Pensions for your specific age and NPA before deciding, rather than relying on a rule of thumb.

Working past Normal Pension Age: late retirement

The reverse also applies. If you keep working and contributing beyond your Normal Pension Age, your eventual benefits are increased through late retirement factors, broadly reflecting the fact that they'll be paid out for fewer expected years. Combined with the extra years of 1/57th accrual you'd build up by continuing to work, this can make working a few years past your Normal Pension Age noticeably more valuable to your eventual pension than the same years worked earlier in your career.

Putting the 25–30x figure in perspective

To make that comparison more concrete: a teacher building up, say, £20,000 a year of guaranteed, inflation-linked TPS pension income over a career has, in effect, secured something that would cost somewhere in the region of £500,000 to £600,000 to buy outright on the open annuity market at retirement, using that illustrative 25–30x multiple. Almost no teacher could realistically accumulate a personal defined-contribution pot of that size through saving alone, especially while also meeting day-to-day living costs across a career — which is precisely why the TPS, despite the contribution that comes off your payslip, represents such disproportionate value relative to its visible cost. It's also why transferring out of a defined benefit pension like the TPS into a personal pension is both extremely unusual in practice and, for most active or deferred members, not even permitted under current rules for unfunded public service schemes — the guarantee being given up is simply very hard to replace.

Part-time working and pro-rated pensionable pay

Reducing your contracted hours doesn't reduce anything you've already accrued — your pot from previous years is completely unaffected. What changes is how much future years add. Your pensionable pay for a part-time year is your actual salary (full-time equivalent salary multiplied by your contracted fraction), not your full-time equivalent figure, so a year worked at 0.6 FTE adds roughly 60% of what a full-time year at the same FTE salary would have added. Because your contribution tier is also based on this actual, pro-rated pay rather than your FTE salary, part-time teachers sometimes sit in a lower contribution band than colleagues on the same FTE salary working full-time — worth being aware of if you're comparing your payslip percentage to a full-time colleague's.

Leaving teaching before you can claim your pension

If you leave pensionable employment before reaching your Normal Pension Age — for any reason, from a career change to emigration — your accrued CARE benefits don't disappear and aren't paid out early by default. They become deferred benefits: the pot stops growing through new 1/57th accruals, but the amount already built up remains preserved in the scheme and continues to be revalued each year to protect its real value, exactly as it would if you were still contributing. You (or your dependants, in the event of your death) remain entitled to claim it from your Normal Pension Age, or earlier subject to the same actuarial reduction that applies to active members. If you return to pensionable teaching later, your later service generally continues to build up in the same way, and depending on the length of the break, your service may be linked as continuous rather than treated as entirely separate periods — check with Teachers' Pensions if a break in service applies to you.

Death-in-service and ill-health retirement

The scheme includes provisions for two situations no teacher wants to think about, and while a full treatment of either is beyond the scope of this page, it's worth knowing they exist and roughly how they're structured.

Death-in-service benefits typically include a tax-free lump sum (commonly a multiple of salary) and an ongoing pension for a surviving spouse, civil partner, or eligible dependants, payable if an active member dies before retirement. Ill-health retirement is split into two tiers: Tier 1, for members unable to continue teaching but considered capable of other gainful work, which pays a pension based on accrued service without enhancement; and Tier 2, for members considered unlikely to be capable of any regular gainful employment, which includes an enhancement reflecting a proportion of prospective service to Normal Pension Age. Both routes involve strict medical evidence requirements assessed independently of your school. If either is relevant to your circumstances, go directly to Teachers' Pensions' own guidance and your school's HR and occupational health processes rather than relying on a general summary like this one.

How this actually differs from a workplace defined contribution pension day to day

It's worth spelling out the practical, lived differences, because they explain why so many of the "normal" rules of thumb around private pensions don't transfer cleanly to the TPS. In a typical workplace defined contribution pension, you can usually see a running account balance at any time, you choose (or default into) an investment fund, and your eventual income depends on both how that fund performed and the annuity or drawdown rates available when you retire. None of that applies here. There's no investment fund to check, no fund choice to make, and no annuity market risk at the point you retire — your income is simply whatever your accrued CARE pension (plus any legacy final-salary pension) adds up to, guaranteed regardless of market conditions on the day you stop working. The trade-off, as covered above, is that you can't usually access it early without a permanent reduction, and you can't leave a large unused pot to your estate the way you might with an untouched defined contribution pension — survivor benefits are instead paid as a spouse's or dependant's pension and a death-in-service lump sum, on terms set by the scheme rather than chosen by you.

This also affects how you should think about pension freedoms more broadly. Since 2015, private defined contribution pensions in the UK have had wide flexibility to draw down however the member chooses from age 55 onwards. The TPS, as an unfunded defined benefit scheme, doesn't offer that flexibility in the same way — your core benefit is a regular income for life, with only the option to commute a portion into a one-off tax-free lump sum at retirement, at a fixed exchange rate set by the scheme. If maximum flexibility over how and when you draw retirement income matters a great deal to you personally, that's a reasonable thing to plan around by building a separate defined contribution pot alongside your TPS membership, rather than expecting the TPS itself to behave like one.

What this page doesn't cover: pre-2015 service and McCloud

Everything above describes the 2015 CARE scheme specifically. If you were already an active TPS member before 1 April 2015, your service before that date sits entirely outside this explanation — it was built up under the pre-2007 scheme (1/80th final salary plus an automatic lump sum) or the 2007 scheme (1/60th final salary, no automatic lump sum), depending on when you joined, with a fixed Normal Pension Age of 60 or 65 rather than your State Pension Age.