The Teachers' Pension Scheme (TPS) is one of the UK's largest public sector pension schemes, covering current and former teachers in maintained schools, academies, and some independent schools in England and Wales. For UK expats who spent part of their career in teaching before moving abroad, a deferred TPS entitlement often represents a substantial, guaranteed retirement income that they may not have thought about carefully since leaving.
This guide is written for former teachers now living outside the UK who want to understand what their deferred TPS benefits are worth, when they can be claimed, how they will be taxed, and what — if any — options exist to alter the arrangement.
Nothing here constitutes personalised financial advice. TPS rules are complex and subject to change. Seek regulated advice, particularly before considering any transfer.
The Teachers' Pension Scheme: Scheme Sections
Like the NHS pension, the TPS has gone through multiple scheme sections over the decades, and which section your benefits fall under depends on when you were an active member.
Final salary arrangements (pre-2015)
NPA 60 Section (joined before 1 January 2007): Benefits accrue at 1/80th of final average salary for each year of service, plus an automatic lump sum of 3× the annual pension. Normal pension age is 60.
NPA 65 Section (joined 1 January 2007 to 31 March 2015): Benefits accrue at 1/60th of final average salary, no automatic lump sum (though commutation is available). Normal pension age is 65.
Transition arrangements: Members who had service in both sections will have "split" benefits calculated under different rules for each tranche.
Career Average Revalued Earnings (CARE) Scheme (2015 to present)
The 2015 CARE scheme applies to active members. Benefits accrue at 1/57th of pensionable pay each year, revalued annually by CPI + 1.6% (for active members). Normal pension age is linked to state pension age, which is currently 67 for those reaching it from 2028 onwards.
The McCloud Remedy
As with the NHS scheme, the TPS was subject to the McCloud age discrimination ruling. Members who were active in the TPS on 31 March 2012 and who were moved to the 2015 CARE scheme from 1 April 2015, will have their benefits during the remedy period (1 April 2015 to 31 March 2022) recalculated at retirement to determine which arrangement — legacy or 2015 — gives the better outcome. If you left teaching service during the remedy period, this recalculation will apply to your deferred benefits.
Contact Teachers' Pensions (the TPS administrator) for an updated benefit statement reflecting the McCloud remedy.
Deferred Benefits: Preservation and Revaluation
When you leave teaching without taking your pension, your benefits are preserved as deferred entitlements.
Final salary sections (NPA 60 and NPA 65): Deferred benefits are revalued annually in line with CPI. This ensures the real value of your pension is broadly maintained in sterling terms during deferral, although the revaluation does not track your overseas cost of living.
2015 CARE scheme deferred benefits: In deferral (i.e., after leaving teaching service), CARE benefits are revalued by CPI annually. The active member rate of CPI + 1.6% applies only while you are actively accruing in the scheme.
Revaluation is applied each April by Teachers' Pensions. The cumulative effect over a long deferral period can be significant — a pension deferred for 20 years will be substantially higher in nominal terms than when you left, even without any active contributions.
When and How to Claim Your TPS from Abroad
Normal pension age
You can claim your deferred TPS benefits at the scheme's normal pension age for your section (60, 65, or state pension age). You do not need to be in the UK to claim; Teachers' Pensions can arrange payment to an overseas bank account, though you should contact them well in advance of your target retirement date to confirm current overseas payment processes.
Early retirement
Early retirement is available from age 55 (though the minimum pension access age is due to rise to 57 from 2028 — check whether TPS rules are aligned or differ). If you take your TPS early, actuarial reductions apply. The reductions are calculated by Teachers' Pensions based on how early the benefits are taken relative to normal pension age.
For the NPA 60 section, retiring at 55 could mean a reduction of approximately 20–25%, though the exact rate depends on current actuarial assumptions. For the 2015 scheme with a normal pension age of 67, retiring at 55 would attract much larger reductions.
The reduced pension is then paid for a longer period, so the financial trade-off is not straightforward. Before requesting early retirement, obtain a benefit illustration from Teachers' Pensions showing the reduced amount, and consider the total income you would receive over your expected lifetime compared to waiting.
Phased retirement
If you return to teaching in England or Wales at some point in the future (for example, after returning to the UK), phased retirement arrangements within the TPS may allow you to draw part of your benefits whilst continuing to teach. This is only available if you return to TPS-eligible employment.
Lump Sum on Retirement
NPA 60 Section: You receive an automatic lump sum of 3× your annual pension at retirement, in addition to the pension. This lump sum is tax-free up to the Lump Sum Allowance (£268,275 as of 2026, shared across all UK pension schemes). You may also commute additional pension for extra lump sum.
NPA 65 Section and 2015 CARE scheme: No automatic lump sum, but you can commute pension for a lump sum at retirement, up to the HMRC-permitted maximum (25% of the total pension value). Commutation rates are set by the scheme.
For those with NPA 60 benefits involving large automatic lump sums, the interaction with the LSA is important to manage — particularly if you also have a SIPP or other pension with tax-free cash entitlements.
Taxation of TPS Income Paid Abroad
TPS pension income paid to a UK non-resident is subject to UK PAYE income tax at source. Teachers' Pensions will deduct income tax before paying your pension.
The TPS is a government service pension, and most UK DTAs contain a "government service article" that deals specifically with the taxation of pensions paid in respect of government employment. Under many UK DTAs, government service pensions can be taxed only in the UK (regardless of where the recipient is resident). However, the position varies by treaty:
- Some DTAs (e.g., the UK–France treaty) reserve sole taxation rights over government service pensions to the UK.
- Others allow taxation in both the UK and the country of residence, with credit relief for UK tax.
- Some non-standard treaties or countries without a DTA leave you subject to UK tax with no double taxation relief.
You must establish the DTA position for your specific country of residence and the treatment of TPS income before your pension commences. If treaty relief reduces or eliminates UK withholding tax, you must claim it proactively via HMRC's DT Individual form.
State Pension Interaction
Many former teachers do not have a full National Insurance record because of periods of non-payment whilst teaching in independent schools (some of which were contracted out of SERPS/S2P), career gaps, or long periods abroad. Before claiming TPS benefits, review your state pension forecast and NI record to understand whether topping up voluntary NI contributions is worthwhile (see our separate guide on voluntary NI contributions from abroad).
The state pension and TPS pension are separate and additive. Together, they may give you a comfortable base income in sterling — though currency risk applies to both for expats spending in foreign currencies.
Transferring TPS Benefits Abroad
The TPS allows members to transfer their Cash Equivalent Transfer Value (CETV) to another UK registered pension scheme (such as a SIPP) or, potentially, to a Qualifying Recognised Overseas Pension Scheme (QROPS). However:
FCA-regulated pension transfer advice is mandatory for any transfer above £30,000. This is a legal requirement, not a suggestion.
The Financial Conduct Authority's position is that transferring out of a defined benefit scheme is unlikely to be in most people's best interests, given the loss of guaranteed, inflation-linked income.
CETV reduction: Public sector CETVs can be reduced (sometimes substantially) by the government actuary. The CETV may not fully reflect the economic value of the guaranteed benefits you are giving up.
Overseas transfer charge: If you transfer to a QROPS, a 25% overseas transfer charge may apply unless you are resident in the same country as the QROPS or meet another exemption.
Irreversibility: Once a CETV transfer is made, it cannot be reversed.
The decision to transfer a TPS CETV is one that requires a full regulated advice process. Very few former teachers benefit from transferring — the certainty and inflation-linking of TPS benefits is difficult to replicate in a DC environment — but there may be specific circumstances (severe ill-health, specific inheritance planning needs) where a transfer could be appropriate. This must be determined case by case.
Practical Action Points for Former Teachers Living Abroad
Register with Teachers' Pensions' online portal (my.teacherspensions.co.uk) and keep your address and contact details up to date. Request a deferred benefit statement annually.
Check McCloud remedy status if you were an active TPS member between 1 April 2015 and 31 March 2022. Teachers' Pensions will be issuing updated estimates; request one if you have not received it.
Take stock of all other pension assets — state pension, SIPP, any private pensions — alongside your TPS entitlement before deciding when and how to access benefits.
Obtain DTA advice specific to your country of residence before your TPS pension commences, to manage UK withholding tax appropriately.
Review commutation options at retirement — particularly if you are in the NPA 65 section or 2015 scheme — to optimise the balance between annual pension and tax-free lump sum within the LSA limits.
How Global Investments Can Help
Global Investments helps former UK teachers living abroad understand their TPS deferred benefits as part of a broader retirement income plan. We can review how your TPS pension interacts with your state pension, any SIPP or private pension, and the tax framework of your country of residence.
Where a CETV transfer review is required, we work with FCA-regulated pension transfer specialists to ensure the process is properly handled and genuinely in your interests. We do not recommend transfers lightly and will give you an honest assessment of whether such a review is warranted in your specific circumstances.
Contact us for a pension review that takes your TPS benefits seriously.
Pension values, scheme rules, and tax treatment may change. This guide is for information only and does not constitute regulated financial advice. Always seek advice from a qualified pension specialist before making decisions about your Teachers' Pension.
This guide is for general information only and does not constitute financial, legal or tax advice. Pension rules, tax rates and programme details change; verify current requirements with a qualified and FCA-regulated pensions adviser before acting. Pension transfers involving defined benefits over £30,000 require regulated advice.