Can I Buy Extra Years on My Teachers’ Pension? Complete Guide to Boosting Your Retirement

If you’re a teacher wondering about ways to enhance your retirement income, you’ve probably asked yourself: “Can I buy extra years on my teachers’ pension?” The short answer is that while you can’t technically “buy years,” you can increase your pension benefits through the Additional Pension option in the Teachers’ Pension Scheme (TPS).

As a former teacher myself, I remember being confused by all the pension jargon when I first started looking into this. Let’s break down exactly how you can boost your teachers’ pension in simple terms.

Understanding Additional Pension in the Teachers’ Pension Scheme

The Teachers’ Pension Scheme offers an “Additional Pension” option that lets active members increase their retirement income through extra contributions. This benefit is available to all active TPS members, regardless of your age or how long you’ve been teaching.

Unlike some other pension schemes that let you “buy years” the TPS works differently. Instead you can purchase Additional Pension in multiples of £250 per annum. This means you’re directly buying an amount of extra annual pension income rather than purchasing years of service.

How Additional Pension Works

There are two main ways to pay for Additional Pension

• Salary deductions: Have regular amounts taken from your monthly paycheck
• One-off lump sum payment: Pay the entire amount upfront

The system is pretty flexible, but there are some important rules:

• You can pay for Additional Pension over a maximum period of 20 years
• All payments must be completed before you reach your Normal Pension Age (NPA)
• Your Normal Pension Age is when you can claim retirement benefits without any reduction

I chose the salary deduction option when I started this process, as it felt more manageable with my monthly budget than finding a large lump sum.

Benefits of Choosing Additional Pension

There are several perks to contributing to Additional Pension:

• Higher retirement income: The obvious benefit is more money during retirement
• Index-linked protection: Your Additional Pension increases with cost of living rises
• Tax efficiency: Contributions come from pre-tax salary, potentially reducing your tax bill
• Flexibility: Choose how much you contribute and your payment method
• Option for survivor benefits: You can choose to include benefits for a surviving partner

The “indexation” part is important because it means that your Additional Pension will go up every April in line with the annual increase for public service pensions from the time you make your election or receive your lump sum payment. This helps your pension maintain its value against inflation.

How Much Does Additional Pension Cost?

The cost depends on several factors:

• Your age when you start contributions
• Whether you want survivor benefits included
• Current contribution rates (which are reviewed every four years)

It’s worth noting that the cost of Additional Pension is reviewed after each scheme valuation, which happens every four years. This means your contribution rates might change over time.

I suggest that you use the Teachers’ Pensions website’s Flexibilities Calculator to get an estimate that is specific to your situation.

Applying for Additional Pension

To get started with Additional Pension, you’ll need to:

1. Complete the flexibilities online form available on the Teachers’ Pensions website
2. Submit the form to your employer
3. Monitor your pay slips to ensure the correct amount is being deducted if you chose the salary deduction method

If you see any mistakes in the deductions, you should call your boss right away to fix it.

What Happens to Additional Pension in Different Scenarios?

If You Retire Early

If you decide to take your benefits before your Normal Pension Age:

• Your Additional Pension will be actuarially reduced to reflect the longer payment period
• This works similarly to how your main pension benefits are adjusted for early retirement

If You Stop Contributions Early

If you decide to stop paying before completing your full term:

• Your Additional Pension will be calculated based on contributions paid up to that point (known as a “paid-up credit”)
• You won’t lose what you’ve already paid for

When Taking Your Pension

You have choices when you actually take your pension:

• You can take your Additional Pension when you take your main scheme benefits
• If you take Phased Retirement, you don’t have to take your Additional Pension at the same time
• You can convert part of your Additional Pension to a tax-free lump sum at retirement, just like with your main pension

Frequently Asked Questions About Additional Pension

Can I buy extra years of service instead?

No, there is no direct way to “buy extra years” through the Teachers’ Pension Scheme. You can instead buy Additional Pension, which gives you a set amount of extra income each year when you retire.

How much Additional Pension can I buy?

Additional Pension can be bought in multiples of £250 per annum. There’s no stated upper limit in the information provided, but you’ll need to consider affordability and tax implications.

What happens if I leave teaching before retirement?

If you leave the TPS before completing your Additional Pension contributions, you’ll receive a “paid-up credit” based on what you’ve paid so far.

Is Additional Pension tax-efficient?

Yes, contributions are made from your pre-tax salary, which can reduce your tax liability.

Can I include protection for my family?

Yes, you can choose whether your Additional Pension is for you only or includes a 50% survivor benefit for your partner after your death. The survivor option costs more.

Comparing Additional Pension with Other Options

The TPS offers several ways to boost your pension:

When I was deciding, I found Additional Pension appealing because of its guaranteed nature – I knew exactly how much extra pension I’d get, and I liked that it had inflation protection built in.

Is Additional Pension Worth It?

Whether Additional Pension is right for you depends on your circumstances:

• Your age: The younger you are, the more time your Additional Pension has to benefit from indexation
• Your career plans: If you’re committed to staying in teaching, it makes more sense
• Your financial situation: Consider if you can afford the contributions
• Your other retirement savings: Look at your overall retirement strategy

For me, it made sense because I started contributing in my early 40s, giving nearly 25 years of indexation before retirement, and I wanted the security of a guaranteed additional income.

Final Thoughts

While you can’t technically “buy years” in the Teachers’ Pension Scheme, the Additional Pension option offers a valuable alternative to boost your retirement income. It’s a flexible, tax-efficient way to enhance your pension and help secure a more comfortable retirement.

I recommend speaking with a financial advisor who specializes in public sector pensions before making any decisions. They can help you understand how Additional Pension fits into your broader retirement strategy.

Remember to check that the correct amount is being deducted from your salary if you choose that payment method, and stay informed about any changes to contribution rates following scheme valuations.

Have you considered other ways to boost your teachers’ pension? What questions do you still have about the Additional Pension option? Share your thoughts and experiences with fellow teachers!