Teachers' Pension Scheme: What You Contribute and What You Get
The TPS explained clearly — 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 in England and Wales.
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 full tax relief at your marginal rate automatically. There's nothing to claim back.
For a basic-rate taxpayer, that means the real cost of an 8.9% pension contribution is actually 8.9% × 0.80 = 7.1% of your take-home. Still significant — but not as painful as it first appears.
Which tier are you in?
Your contribution rate depends on your pensionable pay. Unlike income tax, the rate applies to your full pensionable pay — it's not marginal:
| Actual Pay (per employment) | Contribution Rate |
|---|---|
| Up to £36,198 | 7.4% |
| £36,199 – £48,727 | 8.9% |
| £48,728 – £57,775 | 9.9% |
| £57,776 – £76,571 | 10.5% |
| £76,572 – £104,412 | 11.6% |
| Above £104,412 | 12.0% |
Effective 1 April 2026 — bands uplifted 3.8% in line with September 2025 CPI. Rates unchanged from 2025/26.
A teacher on M3 (£37,101) pays 8.9% = £3,302/year in contributions.
What does the employer put in?
Your school contributes 28.68% of your pensionable pay. On a salary of £37,101, that's £10,641/year going into your pension on your behalf — money you would never see in a private-sector equivalent role.
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 annual slice is then revalued each April by the Consumer Prices Index (CPI).
Example: A teacher on M3 (£37,101) builds up £651/year of annual pension in one year. After 30 years at rising pay, total accrual might be around £18,000–£23,000/year (before any lump sum).
When can you access it?
For most TPS members, normal pension age is 65 (for service accrued since 2015). You can take benefits from age 55 with an actuarial reduction.
Lump sum option
At retirement you can exchange some annual pension for a tax-free lump sum — £1 of annual pension for every £12 of lump sum. Many teachers commute some pension to repay a mortgage or cover early retirement costs.
Should you opt out?
Almost never worth it. If you opt out, you lose the 28.68% employer contribution immediately — that's an enormous loss of deferred pay. The only scenario where alternatives might make sense is if you have specific high-value pension planning advice from a qualified IFA.
Run our calculator to see exactly what your TPS contributions mean for your monthly take-home at your current scale point.
Figures are for guidance only. Not financial advice. For personalised calculations, use the take-home calculator.