On 9 March 2012 the Government announced that proposed final agreements covering reform of public service pension schemes, including the Teachers’ Pension Scheme (TPS), had been drawn up following extensive negotiations with trade unions.

The Government announced on 4 July 2012 that there is sufficient support from public service unions to proceed with implementation of the proposed final agreements announced on 9 March. A copy of the Chief Secretary to The Treasury’s written ministerial statement is available to download. A copy of the proposed final agreement for the TPS is also available.

A Welsh version of the document is now available.

A summary of the reforms

The Teachers’ Pension Scheme is changing. This is necessary mainly because of increased life expectancy, meaning that people have longer in retirement.

The Teachers’ Pension Scheme will be reformed, with the new scheme in place from April 2015

Who it affects:

Those within 10 years of normal pension age (NPA) on 1 April 2012 will be protected from new scheme changes (other than changes to contribution increases). 

  • You will have an NPA of 65 if you joined the TPS since January 2007. If you joined before 1 January 2007 and have continued in pensionable service you will have an NPA of 60.
  • People who are more than 10 years but less than 13.5 years away from NPA, will remain in the existing scheme for a limited period after 2015 before commencing in the new scheme.
  • All others will automatically start the new scheme in 2015. This will give you a pension in two parts: one based on service to 2015 and one based on service in the new scheme from 2015.

What’s different:

  • Your normal pension age will be linked to the ‘state pension age’. State pension age will increase to 66 by 2020, to 67 between 2026 and 2029 and to 68 between 2044 and 2046. You will still be able to retire earlier if you wish, although your pension will be reduced to take account of this.
  • The new scheme is a 'career average' scheme which means that from 2015 your pension benefits will be based on an average of your pensionable earnings between 2015 and your retirement, not on your final salary at retirement. For each of these years, you will accumulate a pension based on 1/57th of your earnings.  This is a better accrual rate than in the final salary scheme.

What happens to my pension so far?

Any benefits you have accrued up to 2015 or when you join the CARE scheme will be protected and payable, based on final salary, when you decide to retire.

To summarise, for those who move to the new scheme; your pension will be in two parts:

  1. The benefits you have earned before 2015, based on your final salary at retirement; plus
  2. The benefits you have earned since 2015, based on your average earnings.

In April 2012 monthly pension scheme contributions will increase for most people. Additional increases will apply from April 2013 and April 2014

In 2010 the Government announced that pension contributions for public service workers would rise by an average of 3.2 per cent of pay. This will take place over three years, with the first increases starting in April 2012. There will be further increases in April 2013 and 2014. Contribution rates will be tiered and provide protection for the lower paid.

To find out what this means for your own pay, use the online calculator. The contribution your employer makes to your pension will remain higher than your own.

Teachers’ Pensions recently launched a new website where you can find a calculator to estimate your pension under the new scheme.

A Welsh translation of this summary of reforms is available to download from the associated resources on this page.