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Teachers' Pensions Scheme explained

This guide explains how the Teachers' Pension Scheme works - from how much you need to pay in to what you'll get when you retire.

In this article
What is the Teachers' Pensions Scheme? Which Teachers' Pensions Schemes apply to me? How much do I contribute into the Teachers' Pension Scheme? When you can collect your Teachers' pension?
How much does the Teachers' Pension Scheme pay? What happens to my Teachers' Pension if I have a break in service? What happens to my Teachers' Pension when I die?

What is the Teachers' Pensions Scheme?

People committed to helping the nation’s children learn in the best possible environment are entitled to expect a decent pension. Those working tirelessly in education have access to the Teachers' Pensions Scheme.

This is a type of pension scheme that pays you an income in retirement which is based upon your earnings over your career.

But major changes to the Teachers' Pensions Scheme came into effect on 1 April 2015, and how much you'll get when you finally come to claim your pension will depend on when you joined the scheme. 

This guide explains what you need to know about the Teachers' Pensions Scheme - from how much you'll need to pay in, and worked examples which show what you can expect to get when you retire.

 

Which Teachers' Pensions Schemes apply to me?

The type of Teachers' Pension Scheme - and how much you'll end up getting in retirement - depends on when you joined the scheme and how far away from retirement you were when changes to the scheme were introduced in 2015.

These dates will determine whether or not your eventual pension will be based on your final salary, or on your career average earnings (the latter of which is less generous).

Some people who used to be in the final salary scheme have been moved into the career average arrangement

Not all members moved to the career average scheme as different arrangements were put in place for those closest to retirement - called your 'normal pension age'. We've explained this further on.

The arrangements are as follows:

You’re a ‘Protected’ member in the final salary scheme if:

  • You were an active member of the before 1 April 2012
  • And you were 10 years or less away from your normal pension age on that date

This means you’ll be in the old final salary scheme until you retire, unless you have a break in service of more than five years.


You’re a ‘Tapered’ member in the final salary scheme if:

  • You were an active member before 1 April 2012
  • And were more than 10 years but less than 13.5 years away from your pension age on that date then you’re a tapered member.

You’ll move into the career average arrangement, on your ‘transition date’ which is determined by your age on 1 April 2012. Find out your transition date on the Teachers’ Pension website.


You’re a ‘Transition’ member in the final salary scheme if:

  • You were more than 13.5 years away from your pension age before the 1 April 2012.

This means you’ll have entered the career average arrangement on 1 April 2015.


You’re a ‘New’ member in the final salary scheme if:

  • You joined the Teachers’ Pension Scheme on or after 1 April 2015

This means you’re in the career average arrangement.

How much do I contribute into the Teachers' Pension Scheme?

Both full-time and part-time workers pay a percentage of their gross salary into their pension each month. This is topped up by employer contributions and you’ll receive pension tax relief on your contributions.

The pension contribution rates for 2018-19 are detailed below:

Teachers Pension contribution rates

Salary range Contribution rate
£0-£27,047 7.40%
£27,047-£36,410 8.60%
£36,410-£43,171 9.60%
£43,171-£57,216 10.20%
£57,216-£78,022 11.30%
£78,022+ 11.70%

When you can collect your Teachers' pension?

The age at which you get to access your pension, called your 'normal pension age', depends on which arrangement or arrangements cover you.

Protected members, those who remain in the final salary scheme, will have a normal pension age of 60 or 65, depending on when they entered pensionable service:

  • If you were in service before 1 January 2007 your final salary normal pension age will be 60 
  • This only applies if haven’t had a repayment of contributions, transferred out or had a break of more than five years.
  • For those entering pensionable service after 1 January 2007, your final salary normal pension age will be 65.

Tapered and transition members, who will have benefits in the final salary and career average schemes, will have more than one pension age. 

  • The pension age for your final salary benefits is as described above. 
  • Your pension age for your career average benefits is either your state pension age or 65, whichever is the later date.

New members, who are only in the career average scheme, have a pension age of either your state pension age or 65, whichever is the later date.

How much does the Teachers' Pension Scheme pay?

Under the career average arrangement, the amount of pension you get is based on your pensionable earnings each year while you are a member of the scheme. 

Every year, you’ll accumulate a pension of 1/57th of your pensionable earnings, including overtime. This will then be increased through a process called 'indexation', which revalues your pension so that it keeps up with inflation. 

It will all be added together throughout your career, and the sum will be the amount of annual income you'll receive when you retire.

Career average: an example

John’s earnings for 1 April 2017 to 31 March 2018 are £30,000. He will earn a pension for that year of: £30,000 x 1/57th = £526.32

At the end of year, the indexation will be added. If that is 3.8%, for example, an extra £20 will be put into John's pension pot. So, his fund will be £546.32 at the start of the next year.

John's salary has increased to £32,000. He'll earn a pension for the next year of £30,000 x 1/57th = £561.40.

This is added to his existing pension pot, giving him a total £1,107.72 a year after two years. Indexation will then be applied to this amount.
 


If you are in the final salary scheme, your benefits are still based on service and an average salary that is determined when you retire.

This means that when you retire, the Teachers' Pension Scheme will use the salaries you have earned in career average to calculate your final salary benefits (rather than your final salary on retirement).

An 'accrual rate' -  is also applied and is dependent on which section of the scheme you are in:

  • Normal pension age = 60, the accrual rate is 1/80th
  • Normal pension age = 65, the accrual rate is 1/60th

Final salary: an example

Jane joined the Teachers' Pension Scheme in 1997, and she has been employed for 20 years. Her average salary at retirement is £30,000.

Her pension is calculated by multiplying her service by her average salary and then dividing by 80.

Jane’s pension = £30,000 x 20 / 80 = £7,500 per annum.
 

What happens to my Teachers' Pension if I have a break in service?

It depends when the break was and which scheme you were covered under.

If you were a final salary member with an normal pension age of 60, and had a break in service of more than five years with a return date on or after 1 January 2007, your pension age remains at 60 for the service before the break. 

It is 65 for the service after the break.

If you’re a protected or tapered member and have a break in service of more than five years, you’ll enter the career average arrangement when you return to pensionable service.

What happens to my Teachers' Pension when I die?

If you're in the career average scheme and die in service, a death grant of three times your final full-time equivalent salary (at your date of death) will be paid.

If you're in the final salary scheme when you die, the death grant would be three times your final average salary.
 

If you're married or in a civil partnership, your partner will receive your full pension for three months. After that, they'll be paid an income until they die, albeit at a reduced rate. 

If you're in the final salary scheme, they'll get 1/160th of your final average salary for each year of service. 

So, if you'd been in the scheme for 20 years, and your final salary was £30,000, they'd get £30,000 x 20 / 160 = £3,750 a year.

If you're in the career average, they'll be paid 37.5% of the pension you've earned up to the date of your death.

If you've been collecting your pension for five years or less, the Teachers' pension scheme will also pay a 'discretionary death grant', worth five times your annual income at the date of death to anyone you nominate. The amount of pension you've already received up to this date will be deducted from this payment.
 

If you die after leaving pensionable employment and have two or more years of pensionable service, your death grant depends on which pension arrangement you were in when you left service.

Final salary arrangement - If you were in the final salary arrangement it’ll be either:

  • Your retirement lump sum at your date of death or
  • Your pension contributions plus interest of 3% if there is no adult pension payable.

Career average arrangement - If you were in the career average arrangement it’ll be:

  • Your accrued pension multiplied by 2.25 or
  • Your pension contributions plus interest of 3% if there is no adult pension payable

Get an expert answer on your pensions 

Our Which? Money Helpline experts can give you independent one-to-one guidance on all kinds of pension queries. If you're not a Which? member and you'd like to get unlimited access to the helpline, you can try Which? Money for two months for £1.

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