The headline numbers
An M5 teacher in England outside London earns £35,841 in 2026/27 (Main Pay Range, England outside London, after the recent pay award). After deductions, take-home is approximately £25,909 a year — £2,159 a month.
| Component | Annual | Monthly |
|---|---|---|
| Gross salary (M5 outside London) | £35,841 | £2,987 |
| Teachers' Pension (9.6% tier — net pay) | −£3,441 | −£287 |
| Income tax | −£3,966 | −£331 |
| National Insurance | −£1,862 | −£155 |
| Plan 2 student loan | −£663 | −£55 |
| Take-home | £25,909 | £2,159 |
The Teachers' Pension Scheme — what you're paying for
The Teachers' Pension Scheme (TPS) for England and Wales is one of the most generous public-sector pensions still open to new joiners. It is a Career Average Revalued Earnings (CARE) scheme: each year you build up 1/57th of pensionable salary as a guaranteed retirement income, revalued each year by CPI + 1.6%.
Contribution rates are tiered by pensionable salary. M5 sits in the 9.6% tier; rates step up to 11.7% for higher-paid teachers and headteachers earning over £74,000+. The contributions go into a notional fund, but the scheme is unfunded — meaning your eventual pension is paid by future taxpayers, not by investment growth. This is fine for a public-sector scheme; the government is the ultimate counterparty.
Approximate value: an M5 teacher progressing through the pay scale to UPS3 (£47,839 outside London) and retiring at State Pension age accrues a guaranteed income of £20,000-£24,000 a year (in today's money) on top of State Pension. To replicate that with private DC contributions would require a pot of £550,000-£700,000. The 9.6% contribution rate is excellent value for that retirement income.
Tax mechanics: TPS is a "net pay arrangement" — contributions are deducted from gross pay before income tax is calculated, so tax relief is automatic at your marginal rate. Unlike salary sacrifice, there is no NI saving — you still pay 8% NI on the gross salary including the pension contribution.
The four decisions worth making as a teacher
- Should you pay AVCs (Faster Accrual or Additional Pension)? TPS offers two AVC options: Faster Accrual (build up 1/45th, 1/50th or 1/55th instead of 1/57th — more expensive but bigger pension) and Additional Pension (one-off contributions for fixed extra annual pension). At M5 in basic-rate tax these are decent but not transformational. They become much more valuable at UPS or leadership pay where you're in higher-rate tax.
- The "Inner London weighting cliff edge". Inner London teachers earn ~£7,000 more on the same point of the pay scale. If your school is in Outer London or Fringe, the difference is smaller. The decision to commute into Inner London is often pension-positive (higher pensionable pay = bigger pension) but financially break-even after travel costs.
- Term-time-only contracts and pension build-up. Teaching assistants and some support roles are term-time only (39 weeks/year). Pensionable pay is the term-time-equivalent figure — meaning your pension build-up is roughly 75% of what it would be on a full-year contract at the same hourly rate. Worth understanding before accepting a term-time-only role.
- Plan 2 student loan and the £28,470 threshold. M5 sits comfortably above the threshold so you're paying ~£665/year on Plan 2. The repayment continues until the loan is paid off or 30 years from the start of repayment, whichever is sooner. For most teachers entering after 2012, the maths is that the loan will be partly written off — meaning over-paying voluntarily is rarely worth it.
What changes at UPS
Upper Pay Range (UPS) tops out at £47,839 outside London. UPS3 is £2,500 below the higher-rate threshold of £50,270 — so a UPS3 teacher just outside London is still in basic rate. Move to Inner London (UPS3 = £58,154) and you cross firmly into higher-rate tax: about £8,000 of pay taxed at 40% income tax + 2% NI.
At that point, AVCs become genuinely tax-efficient. £1,000 of Faster Accrual costs about £580 net for an Inner London UPS3 teacher (40% relief) — and adds permanently to your pension build-up.
The most common mistake teachers make
Underestimating the value of TPS and over-contributing to private pensions. Some teachers, having read general personal finance advice, set up a SIPP alongside the TPS. This is rarely wrong, but it is rarely the highest priority for a teacher in basic-rate tax. The TPS already provides a generous defined-benefit retirement income; an additional SIPP is more valuable as a "bridge" account for early retirement (drawing from 55-67 before the TPS pension starts) than as a primary retirement vehicle. The LISA vs SIPP decision page covers the trade-off.
Sources
School Teachers' Pay and Conditions Document · Teachers' Pensions scheme summary.