Teachers' Pension Guide UK — Understanding Your TPS Benefits

The Teachers’ Pension Scheme (TPS) is one of the best pensions available. Here’s how to understand and maximise your benefits.

TPS Overview

Why It’s Valuable

Feature	Benefit
Defined benefit	Guaranteed income
Employer contribution	23.68% of salary
Inflation protection	Rises with CPI
Death benefits	Family protection
Ill-health cover	Early retirement option

Scheme Structure

Period	Scheme Type
Pre-January 2007	Final salary (NPA 60)
January 2007-2015	Final salary (NPA 65)
Post-April 2015	Career average (NPA SPA)

Contribution Rates

Member Contributions 2025/26

Annual Salary	Contribution Rate
Up to £32,135	7.4%
£32,136 to £43,259	8.6%
£43,260 to £51,292	9.6%
£51,293 to £67,189	10.2%
£67,190 to £81,960	11.3%
£81,961 and above	11.7%

Employer Contribution

Contribution	Amount
Employer rate	23.68%
Total contribution	~31-35% of salary

How Your Pension Builds

Career Average (Post-2015)

Factor	Value
Accrual rate	1/57th per year
Based on	Career average earnings
Revaluation	CPI + 1.6%

Calculation Example

Detail	Figure
Career average salary	£45,000
Years of service	35
Accrual rate	1/57
Annual pension	£27,632

Final Salary (Pre-2015)

Period	Accrual Rate
Pre-2007 service	1/80th per year
2007-2015 service	1/60th per year

Final Salary Calculation

Detail	Figure
Final salary	£50,000
Years (1/80th)	15
Years (1/60th)	8
1/80th pension	£9,375
1/60th pension	£6,667
Total	£16,042 + career average

Retirement Age

Normal Pension Age

Service Period	NPA
Post-April 2015	State Pension Age (67+)
2007-2015	65
Pre-2007	60

Early Retirement

Option	Impact
Take pension before NPA	Actuarial reduction
Approximately	5% per year early
Minimum age	55 (rising to 57 from 2028)

Early Retirement Example

Factor	Value
Pension at NPA 67	£25,000
Taking at 60	7 years early
Reduction	~28%
Actual pension	~£18,000

Actuarial Reduction

Years Early	Approximate Reduction
1 year	5%
2 years	10%
3 years	15%
5 years	23%
7 years	30%

McCloud Remedy

Background

Issue	Explanation
2015 scheme changes	Some teachers had protection
Found discriminatory	Age-based protection unfair
Remedy required	Choice at retirement

Affected Members

You’re Affected If	Status
TPS member before April 2012	Yes
Service between 2015-2022	Affected
Joined after April 2012	Not affected

What Happens

At Retirement	Process
Automatic calculation	Both ways
Choose better option	For 2015-2022
No action needed now	Wait until retirement

Taking Your Pension

Options

Option	Description
Full pension	Maximum annual income
Lump sum exchange	Reduce pension for cash
Phased retirement	Continue working, draw pension
Defer	Delay for higher pension

Lump Sum Commutation

Factor	Details
Exchange rate	£1 pension = £12 lump sum
Maximum	25% of pension capital value
Tax-free	Lump sum not taxed

Is Lump Sum Worth It?

Consideration	Analysis
Break-even point	~12 years
Long life expectancy	Keep pension
Need for cash	Take lump sum
Other income sources	Consider flexibility

Phased Retirement

How It Works

Feature	Details
Reduce working hours	Keep working part-time
Draw some pension	While still accruing more
Flexible transition	Into retirement

Requirements

Requirement	Details
Employer agreement	Must approve
Minimum reduction	20% earnings
Age	Any age eligibility

Death Benefits

Death in Service

Benefit	Amount
Death grant	3x salary
Survivor pension	Up to 37.5% of pension
Children’s pension	If applicable

Death After Retirement

Benefit	Amount
Survivor pension	37.5% of pension
Short-term pension	3 months full pension
Children’s pension	If applicable

Nomination

Action	Why Important
Complete nomination form	For death grant
Update after changes	Marriage, divorce, etc.
Online via TPS	www.teacherspensions.co.uk

Ill-Health Retirement

Total Incapacity

Level	Enhancement
Total incapacity	Service enhanced to NPA
Substantially increased pension	Immediate payment

Partial Incapacity

Level	Enhancement
Partial incapacity	25% of prospective service
Lower enhancement	But immediate payment

Process

Step	Action
1	Employer application
2	Medical assessment
3	TPS decision
4	Payment begins

Understanding Your Statement

Annual Benefit Statement

Item	Meaning
Normal Pension Age	When you can draw full pension
Prospective pension	If you stayed to NPA
Current pension	Based on service to date
CETV	Cash equivalent transfer value

Where to Access

Resource	Location
My Pension Online	www.teacherspensions.co.uk
Annual statement	Posted/emailed
Retirement modeller	Online tool

Part-Time and Supply Teachers

Part-Time

Factor	Details
Pensionable pay	Actual pay received
Full-time equivalent	Used for tiers
Service	Calendar years (pro-rata accrual)

Supply Teachers

Situation	Treatment
Through agency	May not be TPS
Direct with school	Should be TPS
Check contract	Pension arrangements

Gaps in Service

Impact	Details
Break in service	No pension accrual
Re-employment	Rejoin scheme
Previous service	Still counts

Additional Contributions

Faster Accrual

Feature	Details
Buy extra pension	Additional contributions
Maximum	£7,598/year (2025/26)
Increase pension	Higher retirement income

Additional Pension

Cost	Example
Depends on age	Younger = cheaper
£1 extra pension	Costs £17-25
Tax relief	At marginal rate

Common Questions

Leaving Teaching

Option	Process
Deferred pension	Kept in TPS until retirement
Transfer out	Move to new employer scheme
Cash refund	Only if under 2 years service

Returning to Teaching

Situation	Treatment
Rejoin TPS	Automatic if employed
Previous service	Still counts
Different section	May have multiple records

Divorce

Impact	Details
Pension sharing possible	Court order required
Affects retirement income	Pension may be split
Get advice	Complex area

Summary

Key Point	Details
Accrual rate	1/57 (career average)
Employer contribution	23.68%
NPA	State Pension Age (new service)
Lump sum exchange	£1 = £12
Death in service	3x salary + survivor pension

Action	When
Check online account	Annually
Update nominations	After life changes
Use retirement modeller	Before decisions
Understand McCloud	Nearer retirement