The Teachers’ Pension Scheme (TPS) is ‘one of the most generous in the UK’, one expert says
Teacher pensions offer the “gold standard” of retirement income, according to experts – but research shows only one in 10 (11 per cent) of teachers think they offer “very good” value.
Like other public sector pensions, the Teachers’ Pension Scheme (TPS) is often referred to as a gold-plated pension plan, because it offers a guaranteed income for life in retirement, unlike most private sector alternatives.
But new polling commissioned by financial advice firm Wesleyan shows that many teachers don’t value the pensions.
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Polling of 500 teachers, conducted by OnePoll on behalf of Wesleyan, found that just 11 per cent of teachers think it offers very good value and a further 47 per cent say it offers good value.
A quarter (25 per cent) say it offers neither good nor poor value, and 11 per cent believe it offers poor value.
Nearly a quarter (23 per cent) of teachers say they would switch the current TPS scheme from a defined benefit (DB) scheme, which offers guaranteed payments, to a defined contribution (DC) scheme.
These are like those used in private sector jobs and rely on investment growth to fund workers’ retirements.
‘Concern’ that teachers don’t know how good their pensions are
Retirement experts have said that the lack of recognition from teachers as to how good their pensions are is concerning.
The pensions are expensive to fund, with schools paying 28.68 per cent of employees’ eligible wages into the TPS to continue funding the scheme, as opposed to a mandatory 3 per cent contribution in the private sector.
Steve Renfrew, pension expert at Wesleyan Financial Services, said the TPS was “one of the most generous pension arrangements in the UK” but that perceptions of the value were potentially being affected by complexity.
He said: “Many teachers have to take on significantly more responsibility and workloads are rising to punishing levels.
“Many are increasingly dipping into their own pockets for classroom supplies, and in some cases even food, clothing and equipment for pupils. It’s no surprise that when the demands of the job rise, perceptions of the overall reward package change too.
“At the same time, complexity affects how the TPS is valued. The benefits are significant, but the scheme is notoriously hard to understand and around one in five teachers tell us the information they receive about their benefits isn’t clear. If you’re not sure what you’re entitled to, it’s naturally hard to judge its full value.”
Public sector pensions explained
The TPS is a defined benefit (DB) pension scheme. This is different to the defined contribution (DC) pension schemes most private sector workers have.
Under the TPS scheme, staff contribute a minimum of 7.4 per cent of their salary and schools contribute 28.68 per cent, which is used to fund the pensions of current retirees.
The employee builds up an entitlement for their retirement and this is usually worth 1/57 of their annual pensionable pay for each year they work.
In the private sector, employees generally pay a minimum of 5 per cent of their salary into their retirement pots and their employers top this up with an extra 3 per cent. But what the staff member gets in retirement depends on how their investments perform and is not guaranteed.
Tom Selby, head of public policy at investment firm AJ Bell, said pensions should be a key point of public sector recruitment.
“These findings should be of concern to the government, public sector employers and taxpayers, who ultimately help fund the valuable pensions enjoyed by teachers.
“Given that teachers’ pensions are in fact the gold standard of retirement provision and far more generous than those available to most private sector workers, the suggestion that the vast majority do not view the arrangements as ‘very good’ suggests significant work needs to be done to better promote the benefit.
“The availability of a gold-plated DB pension should be seen by public sector employers as one of the key recruitment and retention tools at their disposal, so boosting awareness of its value is essential to attracting and retaining talent within the British education system.”
Worsening pension scheme affecting perceptions
Another key factor affecting teachers’ perceptions of their pension scheme may be that the generosity of the plan used to be even greater.
In 2015, a series of reforms were made to public sector pensions.
The way payments were calculated was altered – with final salary schemes replaced with career average ones – and the age at which pensions could be accessed was raised for some staff.
The polling suggests many teachers are aware of this, with 71 per cent of respondents saying the TPS is not as generous as it used to be.
Is it time to change the TPS?
There has been much debate in recent years about changing the TPS in the future because of the cost.
Recent figures from polling app TeacherTapp for an Education Policy Institute report found that one in six teachers would prioritise an immediate salary increase over retirement benefits.
One set of schools tried to do this in 2025, but was blocked by the Government.
Part of the difficulty is that it would cause short-term funding problems for current retirees’ pension payments, as these are partly funded by contributions from current teachers.
The Policy Exchange thinktank has called for a wider shift from DB to DC pensions in the public sector. It says there would be a short-term cost to this policy but that estimated annual savings could be £37.4bn 50 years after adoption.
Ben Sweetman, head of data analytics at Policy Exchange, said: “Public servants often undervalue their pensions relative to the cost borne by taxpayers, with many even opting out of these generous schemes.
“As we suggested in our report ‘Public Sector Pension Reform’, new public servants should be moved onto defined contribution pension schemes – and some of the resultant savings could be used to bolster salaries.”
The Department for Education was contacted for comment.