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Home/News/Teachers Pension/Career Average/What is the Career Average teacher’s pension scheme?
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What is the Career Average teacher’s pension scheme?

25/06/2019 Racheal Smith

Should you be happy with the career average

All teachers working in state schools in the UK are enrolled in the Teachers’ Pension Scheme.  Many teachers who have been working for many years will have been enrolled in the final salary scheme.  However, since April 2015, the scheme changed to one calculated as a career average.  How this impacts on an individual is involved.  It is a good idea to seek advice to see if you are in one, the other, or a mixture of both schemes.

Here we offer a guide to the Career Average pension scheme.

What is the Career Average pension scheme?

This is a pension scheme where the amount you will receive in your pension will be calculated using your pensionable earnings each year.  You will accumulate a pension of 1/57th every year you are a member of the scheme; this calculation includes any overtime.

Your pension will accumulate, and each year it will be indexed, where a set value will be added to the total benefits.  This indexation will continue throughout the time you are a member of the scheme.

Indexation

Indexation is a revaluation of the benefits you have accrued in the scheme.  Each year the Treasury publishes a rate that the pension will be revaluated at, plus 1.6%.  If you have deferred your pension, then the revaluation is only the Treasury rate.  It is possible for you to have some of your pension at the two different rates of indexation.  The hope is that this process will ensure the value of your benefits will at least increase at the level of inflation.

As indexation changes year on year, it is difficult to estimate the value of your pension on retirement.  Therefore pension calculators are likely to be an estimation of your career average benefits in retirement.

NPA

Contributions will continue to the pension scheme until you reach NPA or Normal Pension Age.  The indexation will also continue until this point.  You can draw from your scheme from the age of 55, but your benefits will be adjusted to account for the likely increase in the time you would be drawing on the pension.

The content in this article was correct on 10th June 2019. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pensions for teachers and non-teachers. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.

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Posted under: Career Average, Teachers Pension

Tagged in: Career Average, Teachers Pension



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