Background briefing on teachers' pensions - 2015 onwards

The Teachers’ Pension Scheme is a public service pension scheme. Like the other main public sector schemes (apart from the Local Government Scheme) it operates on a pay-as-you-go basis, which means that contributions from employers and employees are made to the sponsoring government department, which meets the cost of pensions in payment.

Reforms were introduced from April 2015 under the Public Service Pensions Act 2013. Key changes were: linking the pension age to the State Pension age; a shift to providing pensions based on career average earnings rather than final salary; and a cap on employer contributions to apply in future. Active members were transferred to the new scheme except those covered by transitional protection arrangements for those ‘closest to retirement’, who were allowed to remain in their scheme either until retirement or for a limited period, depending on their age. There are factsheets explaining how the scheme changed in 2015.

The rules are in Teachers’ Pensions Regulations 2014 (SI 2014/512)and Teachers Pensions Regulations 2010 (SI 2010/990).

This note looks at how the scheme has developed, the debate around the main reforms introduced in 2015 and some ongoing issues.

The development of the scheme is discussed in more detail in Library Note SN 405 Teachers’ Pensions – background.