Teachers, Contracting Out and the State Pension
Why a teacher's State Pension forecast comes out lower than the full rate even with 35 qualifying years — the 1978 to 2016 contracted-out period, the starting amount deduction, GMP, and the COPE figure that has disappeared from the official service.
Independent guidance, not affiliated with the DfE, Teachers' Pensions or any teaching union.
Short answer
Why your forecast looks lower than you expected
A teacher in their fifties logs into the Check your State Pension forecast service, expecting to see the full new State Pension. They have worked continuously for thirty years. They know the rule about 35 qualifying years and they are comfortably past it, or nearly there. The number that comes back is lower than the full rate — sometimes substantially lower — and there is nothing on the screen that says why.
This happens constantly, it is not an error, and the explanation is almost always the same. It is not that National Insurance was underpaid, or that years are missing, or that the forecast is wrong. It is that teaching was contracted out, and the consequences of that are baked into the figure without being shown.
This page exists because the official service has stopped explaining it. The Department for Work and Pensions used to display a Contracted Out Pension Equivalent figure alongside forecasts, with a factsheet explaining what it meant. That factsheet has been withdrawn, its page now redirects elsewhere, and the current GOV.UK contracted-out guidance does not use the term anywhere. The deduction still operates. The explanation for it no longer appears.
The reassuring part, stated up front
What contracting out actually was
Until April 2016 the State Pension came in two parts. The basic State Pension was a flat amount earned through qualifying years. On top sat the Additional State Pension — the State Earnings-Related Pension Scheme, or SERPS, from 1978, replaced by the State Second Pension, or S2P, from 2002 — which was earnings-related and built up alongside the basic pension.
Contracting out was the mechanism by which an occupational pension scheme could take over responsibility for that second part. The scheme promised to provide benefits at least equivalent to the Additional State Pension the member was giving up; in return, both the member and the employer paid National Insurance at a reduced rate. It was a substitution, not a loss.
Teachers' Pensions states the position for the Teachers' Pension Scheme precisely: the scheme "was accepted for the purposes of contracting-out of SERPS... and latterly S2P... between 6 April 1978 and 5 April 2016", and "the abolition of contracting-out for all registered pension schemes came in to effect from 6 April 2016. From this date forward the Teachers' Pension Scheme ceased to be contracted-out." GOV.UK puts the end date the same way: all contracting out stopped on 5 April 2016.
1978–2016
The period during which Teachers' Pension Scheme membership was contracted out of the Additional State Pension
Thirty-eight years is a long window, and it covers the whole working life of every teacher now approaching retirement and a substantial part of the careers of teachers now in their forties. If you were teaching at any point before April 2016, you were contracted out for that period, whether or not you have ever heard the term.
A note on the years before 1978
What ended in 2016, and what it cost you
Contracting out was abolished because the two-tier State Pension it was built around was abolished. Once the new State Pension became a single flat-rate benefit with no earnings-related element, there was nothing left to contract out of, and the rebates that had funded the arrangement ended with it.
The rebate figures are worth stating precisely because they are the concrete thing that changed on a payslip. HMRC's National Insurance Manual records that from 6 April 2012 the rebate for employees was 1.4% and for employers 3.4%, and its policy paper on abolition confirms the same figures running to the end: employers in contracted-out salary-related schemes received a rebate of 3.4% and employees a rebate of 1.4%. Teachers' Pensions describes the consequence directly — from 6 April 2016, with the scheme no longer contracted out, National Insurance contributions for employees increased by 1.4% and for employers by 3.4%.
Before 6 April 2016
Employee National Insurance at a reduced contracted-out rate — 10.6% rather than the standard 12% in 2015/16, a saving of 1.4 percentage points. Employer National Insurance at 10.4% rather than 13.8%, a saving of 3.4 points. The saving applied on earnings up to the Upper Accrual Point, £770 a week in 2015/16, and not above it. In exchange, no Additional State Pension was building up.
From 6 April 2016
Standard National Insurance rates for everyone. Teachers saw their own contributions rise by 1.4 percentage points and schools saw employer National Insurance rise by 3.4 points, with no corresponding increase in pay or in scheme benefits. From this point onwards, every qualifying year counts towards the new State Pension on the same basis as anyone else's.
Two details worth getting right, because they are commonly overstated. The saving was capped at the Upper Accrual Point — above £770 a week in 2015/16, contracted-out members paid the standard rates like everyone else, so a head teacher's saving was not proportionally larger than a classroom teacher's. And married women paying the historic reduced rate received no employee rebate at all.
If you were teaching in April 2016 and remember your take-home pay falling without any change to your salary or your tax code, this is the explanation. It was not an error and it was not a pension contribution increase. It was the end of the contracted-out rebate.
The starting amount: the sum that set your figure
When the new State Pension began on 6 April 2016, everyone with an existing National Insurance record needed that record converted into a figure under the new system. That conversion produced a starting amount, and for teachers it is the single most important number in this whole subject, because everything since has simply been added on top of it.
The Department for Work and Pensions describes the calculation as taking the higher of two figures: the amount you would have got under the previous State Pension system up to 6 April 2016, and the amount you would get on the same record if the new State Pension had been in place for your whole working life.
The deduction applies to BOTH calculations — a point widely got wrong
There is no version of the calculation in which a contracted-out teacher escapes the deduction by falling on the favourable side of the comparison. Both sides carry it.
Two deductions with two different names
The two limbs use differently named deductions, and keeping them straight is the key to reading anything written about this subject.
- The Contracted-out Deduction (COD) operates in the old rules calculation. It is the amount subtracted from your gross Additional State Pension, and for pre-1997 service it is based on your Guaranteed Minimum Pension. The Department for Work and Pensions puts it simply: the GMP amount is subtracted from the gross Additional Pension amount, and the GMP amount is called the Contracted-out Deduction.
- The Rebate Derived Amount (RDA) operates in the new rules calculation. The Department for Work and Pensions describes it as introduced into the new State Pension calculation to reflect all periods of contracting out, comprising the Contracted-out Deduction from 1978 to 1996/97, a new notional deduction for contracting out between 1997/98 and 2001/02, and the deduction from gross State Second Pension for contracting out from 2002/03 to 2015/16.
- COPE — the Contracted Out Pension Equivalent — was never a deduction at all. It was an estimate, shown for information, of the pension your workplace scheme should be paying you in place of the Additional State Pension you gave up. Confusing COPE with the deduction is the single most common error in writing on this topic, and it matters because COPE has been withdrawn while the deductions have not.
What this looks like in practice
A worked example makes the mechanism concrete. The figures are illustrative — your own Rebate Derived Amount depends on your actual earnings history — but the structure is exactly as the rules work, expressed throughout in 2026/27 money.
A teacher with 30 pre-2016 qualifying years, all contracted out
Old rules: 30 qualifying years is enough for a full basic State Pension, worth £184.90 a week at 2026/27 rates. Because she was contracted out throughout, she built up essentially no Additional State Pension, and the Contracted-out Deduction removes what little there is. Old rules figure: about £184.90.
New rules: 30 of the 35 years needed, so 30/35 of £241.30 = £206.83 — less the Rebate Derived Amount. If that amount is, say, £45 a week, the new rules figure is about £161.83.
Starting amount: the higher of the two, so £184.90 a week. She is £56.40 short of the full rate of £241.30, which at £6.89 a year takes nine more qualifying years — giving her 39 qualifying years in total to reach a figure that someone with a clean post-2016 record reaches in 35.
A teacher who already had 35 pre-2016 years
Intuition says this teacher is done. She is not. Her old rules figure is the full basic State Pension of £184.90 plus negligible Additional State Pension after the deduction. Her new rules figure is the full £241.30 less her Rebate Derived Amount — if that is £55, about £186.30.
Her starting amount is therefore around £186.30, and she needs a further £55 a week, which is eight more qualifying years. She will need around 43 qualifying years in total. This is exactly the teacher who logs in, sees a shortfall despite a long and unbroken record, and assumes something has gone wrong.
A teacher whose record began after April 2016
None of the above applies. There is no pre-2016 record, therefore no starting amount conversion, no Contracted-out Deduction and no Rebate Derived Amount. Thirty-five qualifying years gives the full new State Pension, exactly as the headline rule says.
This is why the "35 years" figure is so persistently misleading for teachers: it is perfectly accurate, for a group that excludes almost everyone currently mid-career in the profession.
Why 35 years is not your number
The "35 qualifying years" rule is the most repeated fact about the new State Pension and the most misapplied. GOV.UK is careful about it in a way that most secondary coverage is not:
GOV.UK says it explicitly
"If you were contracted out, you will usually need more than 35 qualifying years to get the full rate."
Both sentences sit on the same GOV.UK page. The first is the one that gets quoted everywhere; the second is the one that applies to teachers.
There is a separate minimum worth knowing: you normally need at least ten qualifying years to get any new State Pension at all. That threshold is rarely an issue for career teachers but can matter for someone who taught briefly in the UK and spent much of their working life abroad.
The practical consequence is that a teacher cannot plan a retirement date from the 35-year rule. The only number that tells you anything is your own starting amount and the gap between it and the full rate. Two teachers with identical service records can need different numbers of further years, because their earnings histories produced different Rebate Derived Amounts.
The £6.89 arithmetic that closes the gap
Here is the genuinely useful part, and it is simple enough to do on the back of an envelope.
Each full qualifying year you add after 5 April 2016 increases your starting amount by one thirty-fifth of the full new State Pension. At the 2026/27 full rate of £241.30 a week, that is £241.30 ÷ 35 = £6.89 a week. GOV.UK states the figure directly: each full qualifying year from 5 April 2016 until you reach State Pension age will add about £6.89 a week to your new State Pension.
£6.89 a week
Added by each full qualifying year after 5 April 2016 — £241.30 divided by 35
Two limits apply, and both matter. Years are added to your starting amount until you reach the full amount of the new State Pension or you reach State Pension age, whichever happens first. Once you have reached the full rate, further qualifying years add nothing — the archived GOV.UK guidance put it bluntly: any qualifying years you have after 5 April 2016 will not add more to your State Pension.
So the calculation for any teacher is: take the gap between your starting amount and £241.30, divide by £6.89, and round up. That is how many more qualifying years you need, and any beyond it are worth nothing towards the State Pension.
A live arithmetic error on GOV.UK worth knowing about
The £6.89 figure is correct — it is £241.30 ÷ 35 = £6.894, rounded. It is the explanation next to it that is stale. We mention it because anyone checking our arithmetic against GOV.UK will otherwise think we have made the mistake, and because it is a small illustration of how hard this subject is to get right from official sources.
The rates, side by side
| Item | 2025/26 | 2026/27 |
|---|---|---|
| New State Pension — full rate | £230.25 a week | £241.30 a week |
| Old (basic) State Pension — Category A or B | £176.45 a week | £184.90 a week |
| Additional State Pension and protected payments | uprated 1.70% | uprated 3.80% |
| Value of one post-2016 qualifying year | £6.58 (£230.25 ÷ 35) | £6.89 (£241.30 ÷ 35) |
The full rate and the basic State Pension both rose by about 4.8% in April 2026 — the Department for Work and Pensions' own rate tables print the transitional rate as 4.7991%, and £176.45 to £184.90 is 4.79% — which is the earnings arm of the triple lock. Consumer Prices Index-linked elements, including the Additional State Pension and protected payments, rose by 3.80%.
Protected payments: the one case where you are above the full rate
GMP: the 1978–1997 layer and the age-60 quirk
Sitting inside the contracted-out period is a narrower window with its own rules. For contracted-out service between 6 April 1978 and 5 April 1997, the scheme had to provide a Guaranteed Minimum Pension — a floor broadly equivalent to the Additional State Pension the member had given up. GMP stopped accruing on 5 April 1997, when a different scheme-quality test replaced it.
If you taught at any point in that nineteen-year window, you have a GMP. It is not a separate pension you receive; it is a minimum that part of your Teachers' Pension must satisfy. Most teachers never notice it, because the scheme pension comfortably exceeds the minimum. Where it surfaces is in two genuine oddities.
Oddity one: GMP age is fixed at 60 and 65
GMP pensionable age is 60 for a woman and 65 for a man, and it has never moved. State Pension age has moved repeatedly — upwards for women born after 5 April 1950 and for men born after 5 December 1953, and it is currently rising from 66 to 67. Teachers' Pensions notes the mismatch directly: while GMP age has remained at 60 for women and 65 for men, State Pension age has changed.
The consequence is that the GMP element of a teacher's pension is tested at an age that may bear no relationship to when they actually retire or when their State Pension starts. It is a fossil of a 1978 design that nobody has ever updated, and it is one of the reasons GMP produces such confusing correspondence.
Oddity two: the indexation split at 1988
Increases to a GMP are shared between the scheme and the state, and the sharing changed in 1988:
- GMP accrued 1978 to 1987/88 — no scheme increase required. The Department for Work and Pensions states that defined benefit schemes are not required to uprate GMPs accrued in this period. The Department's own rate tables show the contracted-out deduction for pre-April 1988 contracted-out earnings uprating at nil.
- GMP accrued 1988/89 to 1996/97 — scheme increase capped at 3%. Schemes must uprate this slice up to a maximum of 3% of price inflation. Teachers' Pensions confirms it applies increases to GMP accrued on or after 6 April 1988 up to a maximum of 3%, with the state picking up any difference above that. The rate tables show 3.00% for this element.
Historically, the state made up the shortfall through the Additional State Pension. That mechanism does not work for people reaching State Pension age under the new system, which created a real risk that public servants with GMPs would see the value of part of their pension erode. HM Treasury ran an interim solution from 2016 and then, in March 2021, decided the matter permanently — its response to the Guaranteed Minimum Pension indexation consultation states that the government decided to "make full GMP indexation the permanent solution for public service pension schemes", extending full indexation permanently to those reaching State Pension age from 6 April 2021.
Teachers' Pensions' own page is out of date on this
We are pointing this out not to criticise the administrator but because a teacher reading that page today could reasonably conclude their GMP indexation is unresolved when in fact it was settled five years ago. For GMP indexation, HM Treasury's March 2021 consultation response is the current authority, not the scheme's own page.
The COPE figure that quietly disappeared
This is the part of the story that makes the whole subject worse than it needs to be, and it is why this page exists at all.
For years, the State Pension forecast service showed contracted-out members a Contracted Out Pension Equivalent figure. It was never the deduction itself — it was an estimate of the pension your workplace scheme should be providing in place of the Additional State Pension you had given up. The Department for Work and Pensions' factsheet described it as the amount your workplace or personal pension should include for the periods you were contracted out, equivalent to the additional State Pension you would have got if you had not been contracted out.
It confused people, and understandably so: a figure appearing on a State Pension forecast that referred to a completely different pension, and that did not correspond to the reduction being applied, was always going to be misread. It has now gone.
- The COPE factsheet has been withdrawn. The GOV.UK page that hosted the State Pension factsheets now redirects to the general contracted-out guidance. The factsheet itself survives only in the National Archives web archive.
- The current contracted-out guidance does not mention COPE at all. GOV.UK's live page explains contracting out without using the term, and instead tells users to identify contracted-out service from the National Insurance category letters on old payslips — "If you have any payslips with the category letters D, E, L, N or O, then you were contracted out."
- The current State Pension guidance does not use the term either. The Department for Work and Pensions' Your State Pension explained, updated in April 2026, describes the starting amount and the contracted-out deduction at length and never uses the word COPE.
- The start page for the forecast service makes no mention of contracting out. It offers how much you could get, when you can get it, and how you could increase it — nothing about why the figure might be lower than expected.
What we can and cannot say about when and why this happened
The date and the reason are not. Press reports from October 2024 place the removal from forecasts in April 2024 and attribute it to the confusion the figure caused. We could not find any dated departmental announcement, policy paper or press release from the Department for Work and Pensions confirming either. We are therefore reporting it as reported, rather than stating it as fact.
We also cannot verify what the signed-in results screen shows today, because that sits behind Government Gateway authentication. If you have a forecast open and it shows a COPE figure, that would be useful to know — but the published guidance around it has certainly gone.
The effect on a teacher is straightforward and unfortunate. Before, you saw a reduced figure and an unexplained number next to it. Now you see a reduced figure and nothing at all. Whatever the merits of removing a confusing figure, nothing has replaced it, and the burden of working out why the forecast is lower has been transferred entirely to the member.
One practical substitute the current guidance does offer is the payslip test. National Insurance category letters D, E, L, N and O all indicate contracted-out employment. If you have old payslips from before April 2016 in a drawer, the letter on them tells you immediately whether this page applies to you.
What to actually do about it
Understanding the mechanism is worth something, but only if it leads to a decision. These are the steps that change outcomes.
- Get your actual forecast rather than reasoning from the 35-year rule. The Check your State Pension forecast service on GOV.UK gives you your current figure, your State Pension age and which years can still be filled. Nothing on this page substitutes for your own number.
- Work out the gap, and divide it by £6.89. That tells you how many further qualifying years you need — and, just as importantly, when further years stop being worth anything at all.
- Check whether you will actually reach State Pension age before you close the gap. Years only count until you reach State Pension age, so a teacher who needs nine more years and is eight years from State Pension age has a real problem to solve rather than a theoretical one.
- Do not buy voluntary contributions blind. Filling a gap year only helps if it increases your starting amount, and it adds nothing once you are at the full rate. Check what a specific year would add before paying for it — the forecast service shows this, and the Future Pension Centre can confirm it.
- Remember that credits count as well as contributions. Qualifying years can come from National Insurance credits as well as paid contributions — periods receiving Child Benefit for a child under 12, carer's credits, and certain benefit periods. Teachers who took career breaks for childcare frequently have more qualifying years than they realise, and occasionally fewer than they should because Child Benefit was claimed in a partner's name.
- Factor the real figure into your retirement date, not the headline one. A teacher planning to retire at 60 on the assumption of a full State Pension at 67 may be building their plan on a number that is £30 or £40 a week lower than assumed. Our early retirement reduction factors guide covers the other half of that arithmetic.
- Keep your old payslips, or at least check one. The National Insurance category letter is the quickest confirmation of contracted-out service, and it is also useful evidence if any part of your record is disputed.
The wider point worth holding on to
Sources, and what we could not verify
Everything on this page is drawn from primary sources: the Department for Work and Pensions' Your State Pension explained and its benefit and pension rates tables for 2026/27, GOV.UK's contracted-out and new State Pension guidance, HMRC's National Insurance Manual, HM Treasury's March 2021 response to the Guaranteed Minimum Pension indexation consultation, and Teachers' Pensions' own contracting out page.
We also checked the House of Commons Library briefing that is frequently cited on this subject. SN02674 is titled "State Pension – deductions for contracting-out", was published on 26 September 2019 and has not been updated since. It is a useful confirmation of how the starting amount comparison works, but it predates the removal of COPE by several years, says nothing about it, and its figures are now substantially out of date. We cite it for the mechanism, not for any current number.
Three things we could not verify, stated plainly: the date and official reason for COPE's removal from forecasts; what the signed-in forecast screen displays today, which sits behind authentication; and the precise treatment of pre-1978 teaching service under the graduated retirement benefit and non-participation rules. Where those matter to your own position, the Future Pension Centre is the right place to ask.
Frequently asked questions
Why is my State Pension forecast lower than the full rate when I have over 35 years of National Insurance? +
Almost certainly because you were contracted out. The Teachers' Pension Scheme was contracted out of the Additional State Pension from 6 April 1978 until contracting out ended on 5 April 2016, so every year you taught in that window bought you scheme pension instead of Additional State Pension — and a deduction was applied when your starting amount for the new State Pension was calculated in April 2016. GOV.UK says it plainly: if you were contracted out, you will usually need more than 35 qualifying years to get the full rate. The 35-year figure applies to someone whose National Insurance record started after April 2016 and to nobody else.
Is this a penalty, or did I lose something? +
Neither, strictly. Contracting out was a trade, and both sides of it were real: you and your employer paid lower National Insurance during those years, and in exchange the Teachers' Pension Scheme took on the obligation to provide a pension at least as good as the Additional State Pension you were giving up. What you have is a larger occupational pension and a smaller State Pension, rather than a smaller total. What is genuinely unsatisfactory is not the deal but the communication — you are shown a lower figure today with no explanation of where it came from.
How much did contracting out actually save me in National Insurance? +
The employee rebate was 1.4% and the employer rebate 3.4%, both delivered as a reduced National Insurance percentage on earnings up to the Upper Accrual Point, which was £770 a week in 2015/16. When contracting out was abolished, those rebates went and National Insurance rose accordingly — teachers saw their own contributions go up by 1.4 percentage points from 6 April 2016, and schools saw employer National Insurance go up by 3.4 points. If you remember your take-home pay dropping in April 2016 without any change to your salary, that is why.
What is the difference between COPE, the Contracted-out Deduction and the Rebate Derived Amount? +
They are three different things and they get conflated constantly. The Contracted-out Deduction is the amount subtracted from your Additional State Pension in the old-rules calculation. The Rebate Derived Amount is the deduction applied in the new-rules calculation, reflecting all your contracted-out periods from 1978 to 2016. COPE, the Contracted Out Pension Equivalent, was never a deduction at all — it was an estimate, shown for information on forecasts, of the private or occupational pension you should be receiving in place of the Additional State Pension you gave up. The deductions still operate. It is COPE, the explanatory figure, that has gone.
How many extra years do I need to reach the full new State Pension? +
It depends entirely on your starting amount at 6 April 2016, and there is no rule of thumb that works. The arithmetic itself is simple: each full qualifying year after 5 April 2016 adds about £6.89 a week — the full rate of £241.30 divided by 35 — until you either reach the full rate or reach State Pension age, whichever comes first. So take the gap between your starting amount and the full rate, divide by £6.89, and round up. Years added once you are already at the full rate add nothing at all, which is the other half of the reason checking matters.
What is a Guaranteed Minimum Pension and do I have one? +
If you taught between 6 April 1978 and 5 April 1997, yes. A Guaranteed Minimum Pension is the floor the Teachers' Pension Scheme had to provide for contracted-out service in that window — broadly, a pension at least equal to the Additional State Pension you would otherwise have built up. It stopped accruing on 5 April 1997, when a different test replaced it. Its most confusing feature is that GMP age is fixed at 60 for women and 65 for men, regardless of your actual State Pension age, so the GMP element of your pension is assessed at an age that may have nothing to do with when you retire.
Why is the indexation of my GMP different from the rest of my pension? +
Because responsibility for increasing it is split, and the split changed in 1988. Schemes are not required to increase GMP accrued between 1978 and 1988 at all, and are required to increase GMP accrued from 1988 to 1997 only up to a maximum of 3%. Historically the state topped up the difference through the Additional State Pension, but that mechanism does not work for people who reach State Pension age under the new system. HM Treasury resolved this for public service schemes in March 2021, deciding that full GMP indexation would be the permanent solution for public service pension schemes, having run an interim solution since 2016.
Can I still find out my COPE figure? +
Not from the current GOV.UK guidance, which no longer mentions it anywhere. The Department for Work and Pensions' COPE factsheet has been withdrawn and its page now redirects to the general contracted-out guidance, which explains contracting out without using the term at all. Press reports place the removal from forecasts in 2024, though we could not find a dated departmental announcement. If you want the figure, asking the Department for Work and Pensions directly is the route people report using — but the more useful question is usually not what your COPE was, but what your starting amount is and how many more qualifying years you need.
Does this affect teachers who started after 2016? +
No. If your entire National Insurance record began on or after 6 April 2016, there was no contracted-out period to deduct, 35 qualifying years does give you the full new State Pension, and none of the starting amount machinery applies to you. This is genuinely a problem for teachers with pre-2016 service, which is to say anyone who has been teaching for eleven years or more, plus anyone who had any other contracted-out employment before that date.
Should I pay voluntary National Insurance to fill gaps? +
Possibly, but check first, because it is the one decision here where getting it wrong costs real money. A voluntary contribution only helps if the year it buys actually increases your starting amount — and years bought once you have already reached the full rate add nothing. Some pre-2016 years are also worth less than they appear because of the contracted-out position. The Check your State Pension forecast service on GOV.UK shows which years can be filled and what each would add, and the Future Pension Centre can confirm whether a specific payment would help before you make it. Do not buy years on the assumption that more is always better.
Related guides
Teachers' Pension Scheme 2015 (CARE) Explained
The scheme pension that took on the Additional State Pension obligation while you were contracted out.
Teacher AVCs Explained
If your State Pension will be lower than expected, a separate pot is one of the ways to bridge it.
Teachers' Pension Benefit Statement Explained
Your scheme statement and your State Pension forecast are two separate documents — this explains the first.
TPS Early Retirement Reduction Factors Explained
The other half of the retirement date arithmetic, if you are planning to stop before State Pension age.
Teachers' Pension Lump Sum and Commutation Explained
Bridging the gap to State Pension age is one of the few genuinely good reasons to commute.
Teachers' Pension Calculator
Model the scheme pension that sits alongside your State Pension.