Teachers’ Pensions: what do teachers need to know in 2025?

The Teachers’ Pensions Scheme (TPS) is an organisation which many of our subscribers contact us about on a daily basis. 

You may have seen stories in the news recently about increased contribution rates, cash equivalent transfer values (CETV) affecting teachers who are divorcing, transitional protection arrangements to younger teachers exploring flexibility over pension contributions.

With reported long waiting times when contacting TPS for clarification, numerous Facebook groups, Mumsnet forums and Reddit forums have come to fruition to try and make sense of the various changes and to try and demystify some of these processes.

Compared to working in the private sector, the TPS is a very generous pension scheme with the employer contribution rate at 28.68% (compare that to the 3% minimum which employers must provide in the private sector) and you can see that the TPS is definitely a major benefit of the teaching profession. 

At Edapt, many school staff trust us as an objective source of information and to make complex issues easy to understand.

Within the UK, the giving of financial advice is a tightly regulated activity and as such, at Edapt, we are unable to provide that advice directly. However, as an apolitical organisation we are able to provide objective summaries and point you in the right direction. 

In addition, if you are a subscriber and have a specific question about your individual pension we have a partnership with an independent financial advice team who are able to support you.

Teachers’ Pensions: what are my contributions now?

You might have heard that the DfE has increased teachers’ pension contributions for the first time since 2015. The changes came into effect from 1 April 2025.

The TPS regulations require that members and their employers pay set contributions towards funding pension benefits. Employers currently pay contributions equivalent to 28.6% of pay, whilst members are required to pay an average of 9.6%. 

If you are earning less than £34,873, you will not be impacted as your contribution rate will stay at 7.4%. The other salary bands have changed just a small amount of 0.4% or less. Essentially, if you are earning more than £34,873 you take home pay will be affected from between £8-£17 per month.

How much you need to pay in depends on salary, with lower-earning members paying in a smaller percentage of income. Contributions from 1 April 2025 are:

Cash equivalent transfer value: what do I need to know?

You may have heard that teachers have been experiencing financial strain and stress after long waits to get a divorce, following delays in pension valuations from the TPS.

The value of a pension is needed by the courts to decide whether it should be shared with an ex-partner, and without which it is almost impossible to reach a financial settlement. A CETV is usually provided within three months of a request being submitted but some teachers have been waiting much longer.

TPS explains, “We’ve made significant progress to reduce the backlog that built up whilst the necessary guidance was developed, with 80% of those CETVs being issued since the end of October.”

“In summary, all the backlog cases, apart from those for certain retired members and those who haven’t retired but have flexibilities, have now received their CETV. 

We apologise for the inconvenience the delay has caused and want to assure you that the remaining cases remain a priority and we’re working as quickly as possible to clear.”

Transitional protection: what do I need to know?

Transitional protection is a type of financial safeguard for some members of the TPS, especially those affected by changes to the scheme in 2015.

Back then, the government changed public service pension schemes (including Teachers’ Pensions), and some teachers were moved from the old Final Salary scheme to the new Career Average scheme.

Even though the pension rules have changed, TPS will make sure your pension is no worse than it would have been under the old rules.

This is especially important for people who were close to retirement in 2015 and might otherwise have lost out by being moved to the new scheme.

For example, if you were moved to the new career average scheme in 2015 and were expecting to retire in 2025. If the change to the new scheme gives you a smaller pension than you would have had in the Final Salary scheme, transitional protection means you will get a better outcome.

This is all part of something called the McCloud Remedy, which is a government fix after a court ruled that the 2015 changes were discriminatory. From 2015–2022, if you were affected, you’ll get to choose (at retirement) whether you want your pension for those years calculated under the Final Salary scheme or the Career Average scheme.

What pensions do younger teachers want?

You may have heard reports that some younger teachers would favour higher take-home pay compared to higher pension contribution rates in their earlier years.

The latest report by the Education Policy Institute (EPI), explores whether providing more flexibility over teachers’ pensions and remuneration could support improved recruitment and retention in the profession. EPI collaborated with Teacher Tapp to survey nearly 6,000 teachers to find out what they want from their compensation package and how valuable the current TPS is to them.

The EPI’s study found 15% of teachers would opt for a 10% increase in their current salary, even if it meant losing 20% of their retirement income. Meanwhile almost 20% of teachers in their 20s said they would opt for the scheme.

United Learning, the largest academy trust in England, has already explored an alternative pension scheme that provided teachers with more take-home pay. The plan would have meant a teacher earning £39,000 could receive a pay-rise to nearly £45,000 in return for lower employer contributions to their pension schemes. However, these plans have now stalled with the government intervening. But The i Paper understands that civil servants at the DfE has written to United Learning and told the trust it opposes the plan. 

The Government has suggested that part of the trust’s funding could be ring-fenced and that they would not be able to access this cash unless it was being used to pay for membership of the TPS pension scheme. It told the trust it also faced the threat of a financial notice to improve, which would come from the Education and Skills Funding Agency (ESFA).

Teachers’ Pensions: what does the future hold?

The future of the TPS is shaped by a combination of government policy, economic pressures, and ongoing pension reform. Ongoing reviews are examining the cost and sustainability of public service pensions. The Cost Control Mechanism (CCM) introduced in 2015 was ruled to have issues by the courts, and a reformed version is being tested to avoid “unintended consequences” like over-generous or unaffordable pensions. 

There’s likely to be a greater push for flexible retirement, with more options for partial retirement or phased return. With an aging workforce, this could help retain experienced staff. Any major changes to the TPS are politically sensitive, as they affect a large number of public servants. If public finances become tighter, reform proposals could resurface (for example, moving to a hybrid scheme or further aligning with private sector pensions).

If you are an Edapt subscriber, we can support you with a range of employment-related issues, including pay, employment contracts, maternity leave and questions on pensions.