Teachers' pension — can you retire early?
The 2015 career average TPS scheme links normal pension age to state pension age. Early retirement is possible from 55, but an actuarial reduction applies for every year before normal pension age. This guide covers the rules, the cost, and the alternatives.
- ▸Normal pension age in the TPS 2015 career average scheme is state pension age (currently 67).
- ▸Early retirement is possible from age 55, but an actuarial reduction of approximately 3–5% per year applies before normal pension age.
- ▸Final salary TPS members (pre-2007 and 2007 arrangements) have a normal pension age of 60 or 65 — those benefits are unaffected by the 2015 scheme NPA.
- ▸Phased retirement allows teachers to draw part of their TPS pension while continuing to teach — a practical middle route.
Normal pension age in the 2015 career average scheme
The Teachers' Pension Scheme (TPS) 2015 career average arrangement — which covers all active TPS members for current and future service — sets normal pension age (NPA) equal to state pension age (SPA).
Current SPA is 67 for those born after 5 October 1954. It is due to rise to 68 for those born after 5 April 1977, though the timetable for this increase has been subject to review. Teachers building up pension in the 2015 arrangement should plan for an NPA of at least 67.
This is a significant shift from the pre-reform TPS. Before 2007, TPS had an NPA of 60. The 2007 arrangements raised it to 65. The 2015 scheme extended it to SPA. For a teacher currently aged 40, that is a normal pension age seven years later than a colleague who joined before 2007 would have had.
The 2015 scheme uses a 1/57th career average accrual rate — every year of service builds up annual pension equal to 1/57th of your pensionable pay in that year, revalued annually by CPI until retirement.
Use the Teachers' Pension Calculator to model your projected TPS pension at different retirement ages, including the actuarial reduction for early access.
Actuarial reduction for early payment
Early retirement from the TPS 2015 career average arrangement is possible from age 55 (rising to 57 from 6 April 2028 for benefits not already in payment). Drawing before NPA triggers an actuarial reduction — a permanent percentage cut applied to both the pension and any lump sum.
The TPS actuarial reduction factors are published by Teachers' Pensions and updated periodically. As a general guide, the reduction is approximately 3–5% per year before NPA. The precise figure depends on your age at retirement and the current actuarial basis.
Worked example — what early retirement actually costs:
A teacher retires at 62 with a projected 2015 scheme pension (at NPA of 67) of £16,000 per year. Early retirement is 5 years before NPA.
At approximately 4% per year, the actuarial reduction is 20%. The pension in payment becomes £16,000 × 0.80 = £12,800 per year — a reduction of £3,200 per year for life.
Over a 25-year retirement (ages 62–87), the total pension received in the early retirement scenario is £320,000. In the no-early-retirement scenario (drawing from 67 to 87, 20 years), total pension received is £320,000. Break-even at age 87.
But this comparison ignores the 5 extra years of pension payments (ages 62–67) in the early retirement scenario — roughly £64,000 at the reduced rate. Factoring this in, you need to live beyond 87 for delayed retirement to produce more total income. At current life expectancy for a 62-year-old (around 85–87), the comparison is marginal.
The break-even analysis does not account for pension increases, investment returns on the early pension, or the teacher's specific circumstances. It illustrates why early retirement decisions are personal and context-dependent.
- ▸TPS 2015 scheme normal pension age equals state pension age (currently 67). [Teachers' Pensions]
- ▸Early retirement from TPS is possible from age 55, rising to 57 from 6 April 2028. [Teachers' Pensions]
- ▸The TPS 2015 scheme uses 1/57th career average accrual, revalued by CPI annually. [Teachers' Pensions]
Final salary scheme protections
Teachers who built up service before the 2015 reforms have legacy TPS benefits governed by different rules:
Pre-2007 arrangement (final salary, 1/80th accrual): Normal pension age is 60. Includes an automatic lump sum of approximately 3× pension. These benefits can be drawn from age 60 without any reduction, regardless of state pension age. A teacher with substantial pre-2007 service can draw those benefits at 60 while leaving 2015 scheme benefits to continue accruing until 67.
2007 arrangement (final salary, 1/60th accrual): Normal pension age is 65. No automatic lump sum. These benefits can be drawn from age 65 without reduction.
McCloud remedy: Teachers in service before and after the 2015 reforms are affected by the McCloud remedy, which covers the period 1 April 2015 to 31 March 2022. For that remedy period, at retirement you will have the option to calculate benefits under the legacy arrangement rules or the 2015 scheme rules — whichever is higher. See the McCloud remedy explained guide.
The practical result for long-serving teachers: legacy benefits from before 2015 retain their original lower NPAs. A teacher with pre-2007 service genuinely can retire at 60 — for the pre-2007 portion. The 2015 scheme benefits either wait until 67 or are drawn early with a reduction.
Phased retirement: drawing pension while continuing to teach
Phased retirement is a formal TPS option that allows eligible teachers to draw some or all of their accrued pension while remaining in teaching employment. It provides a practical middle route between full retirement and continued full-time work.
How it works: You reduce your pensionable pay or hours (typically by at least 20% or move to a lower grade) and elect to draw some or all of your accrued TPS benefits. Your pension is put into payment while you continue teaching part-time or in a reduced role.
Eligibility: You must be at least 55 and meet the TPS phased retirement criteria. Your employer must agree to the arrangements. You continue to accrue new pension in the TPS on your reduced pay and hours.
Tax implications: The pension drawn in payment is taxable income. Combined with any employment income, this may push you into a higher tax bracket temporarily — worth factoring into the planning.
Why it can work well: For teachers who want to reduce workload without giving up their pension income entirely, phased retirement avoids the full actuarial reduction that would apply to complete retirement before NPA. You can draw the pension built up on pre-phased service (at the appropriate NPA for that service) and continue building up new 2015 scheme benefits.
Teachers' Pensions administers phased retirement applications. Full guidance is on the Teachers' Pensions website. For personal projections, use the Teachers' Pension Calculator. For a comparison with NHS and other public sector schemes, see the public sector pensions guide.
This is factual information, not financial advice. If you're unsure what's right for your situation, speak to an FCA-regulated financial adviser.