Teachers' Pension Scheme: What You Contribute and What You Get
The TPS explained clearly — 2026/27 contribution tiers, what you build up each year, the 28.68% employer contribution, and why it remains one of the best pensions available to teachers.
The pension that comes out before tax
One thing that often surprises teachers when they first look at their payslip is that TPS contributions come out before income tax is calculated — this is called a Net Pay Arrangement (NPA), and it means you get tax relief at your marginal rate automatically. There's nothing to claim back.
For a basic-rate taxpayer, the real cost of an 8.9% pension contribution is 8.9% × 0.80 = 7.1% of your pay. National Insurance is still charged on your full salary, so there's no NI saving.
Which tier are you in?
Your contribution rate depends on your actual pensionable pay. Unlike income tax, the rate applies to your whole salary — it's not marginal:
| Actual pay (per employment) | Contribution rate |
|---|---|
| Up to £36,198 | 7.4% |
| £36,199 – £48,727 | 8.9% |
| £48,728 – £57,776 | 9.9% |
| £57,777 – £76,572 | 10.5% |
| £76,573 – £104,413 | 11.6% |
| £104,414 and above | 12.0% |
Effective 1 April 2026 — bands uplifted 3.8% in line with September 2025 CPI. Rates unchanged.
A teacher on M3 (£38,400) pays 8.9% = £3,418/year in contributions.
What does the employer put in?
Your school contributes 28.68% of your pensionable pay. On M3, that's £11,013/year going into your pension on your behalf — money you would never see in most private-sector roles.
How CARE accrual works
The TPS is a Career Average Revalued Earnings (CARE) scheme. Each year of service, you build up a pension equal to 1/57 of your pensionable pay that year. That slice is then revalued each April by CPI + 1.6% while you're still working.
Example: A teacher on M3 (£38,400) builds up £674 a year of pension in one year. After 30 years at rising pay, total accrual might be around £20,000–£25,000 a year in today's money (before any lump sum).
When can you access it?
For most TPS members, normal pension age is your State Pension age (for service since 2015). You can take benefits from age 55 (rising to 57 from April 2028) with an actuarial reduction.
Lump sum option
At retirement you can exchange some annual pension for a tax-free lump sum — £12 of lump sum for every £1 of annual pension given up. Many teachers commute some pension to repay a mortgage or bridge early retirement.
Should you opt out?
Almost never worth it. If you opt out, you lose the 28.68% employer contribution immediately — an enormous loss of deferred pay. The only scenario where alternatives might make sense is with specific advice from a qualified independent financial adviser.
Run our calculator to see exactly what your TPS contributions mean for your monthly take-home.
Figures are for guidance only. Not financial advice. For personalised calculations, use the take-home calculator.