Changes to the Teachers’ Pension Scheme (TPS)

The McCloud Judgement (Transitional Protection Remedy)

You may already have heard of ‘transitional protection’ from the TPS. For most people, there’s nothing you need to do about it right now. You’ll simply see your TPS benefit statement updated to reflect the changes.

For more details, here’s the background to transitional protections, and how you might be impacted:

Career average schemes introduced

In 2015, new ‘career average’ arrangements were introduced to most public sector pension schemes including the TPS. Most members of the existing final salary scheme were moved into the new scheme, but members close to retirement were given certain ‘transitional protections’.

A ruling known as the McCloud judgement then found those protections to be discriminatory against younger members of the firefighter and judicial pension schemes and later all public sector pension schemes. 

Rollback of protections

As a result of the ruling, a rollback of these protections took place in October 2023. That meant all pensionable service accrued between April 2015 and 31st March 2022 (the ‘remedy period’) was rolled back to the final salary scheme. 

All members still active in the scheme as of 1st April 2022 were then moved (fairly) into the career average scheme.

When you come to take your benefits at retirement, if you were affected by the transitional protection remedy, you will get to decide for yourself which scheme you want to accrue benefits in for the seven-year remedy period.

Who is affected by the McCloud Judgement / transitional protection remedy?

It’s important to note the transitional protection remedy doesn’t affect all TPS members. It only affects you if you were in service before 31st March 2012 and on or after 1st April 2015.

That includes those who’ve taken their pension benefits since 1st April 2015, and deferred members returning within 5 years. 

You won’t be affected if you:

• Joined the Teachers’ Pension Scheme on or after 1st April 2012
• Retired and took your benefits before 1st April 2015
• Had a break in service of more than five years since 1st April 2012 
• Have no pensionable service in the remedy period

What happens next for those who are affected?

If you’re impacted by the transitional protection remedy, you will be asked to make a choice (about which scheme you want to take benefits from for the remedy period) when you access your benefits. 

This approach, known as ‘Deferred Choice Underpin (DCU)’, allows members to make a choice based on their actual career and a known retirement date.

Members who have already taken benefits since April 2015  will be contacted, and their choice will be applied retrospectively. If you are the beneficiary of a member who has died, you will also get to choose.

These members will be contacted between December 2023 and August 2024.

Remember, for most members, there’s nothing you need to do right now. You’ll simply see your TPS benefit statement updated to reflect the ‘rollback’.

However, if you took out Faster Accrual, Buy Out or Additional Pension during the remedy period, you'll be contacted by the TPS separately from November 2023, as these options are unavailable in the final salary scheme.

What if I joined the scheme after 2012?

Teachers who joined the Teachers’ Pension Scheme after April 2012 will not be impacted by the changes.

These members would not have been eligible for protection no matter how close to retirement they were. They are therefore unaffected by the remedy.

The only exceptions are any members who transferred in from other public service pension schemes.

Other recent changes affecting the Teachers’ Pension Scheme

Contribution changes

The employer contribution rate of the Teachers’ Pension Scheme (TPS) in England and Wales is set to go up from 23.68% to 28.6% from April 2024.

This will have a big impact on employer pension costs for private schools.

Current contribution rates for both employer and employee can be found in our main guide to the Teachers’ Pension Scheme.

Changes to annual and lifetime allowances:

While not strictly changes to the Teachers’ Pension Scheme, recent changes to the annual and lifetime allowances have notable impact for pensions in general.

In April 2023, the annual allowance (how much you can contribute to a pension each year and receive tax relief) was increased by 50%, from £40,000 to £60,000 per year.

The lifetime allowance will be abolished altogether from April 2024. This is the limit on how much you can accrue in pensions over your lifetime without incurring a tax charge and is currently £1,073,100. The charge was removed in April 2023 but abolished altogether from April 2024. The Lifetime allowance will however be replaced with a limit on lump sums and lump sum death benefits.

Tax treatment depends upon your individual circumstances and may be subject to change in the future.