Types of contributions

Members can and do receive pensionable pay that is in addition to their ‘normal’ pensionable salary. Pensionable earnings, on which contributions are due, include residential emoluments, overtime (career average only), out of school learning activities (OSLA) payments and bonus payments (although only where it is performance related and / or part of the contract for all employees or all employees of a particular class and description and not, for example, an honorarium or a one-off non-performance related bonus).

Residential Emoluments

The Teachers’ Pension Scheme Regulations allow the value of free accommodation to be included in contributable salary where you have agreed this with Teachers’ Pensions.

  • They are not automatically carried over from one post holder to the replacement.
  • You have three months from the start of the employment (or from when the accommodation becomes available) to agree the emolument with Teachers’ Pensions. However, we’ll need written evidence of the valuation calculations before they’ve accepted residual emolument as part of a teacher’s contributable salary.
  • The emolument should be reviewed every two years or the agreement may be rescinded and the contributions refunded.
  • The valuation used consists of current gross annual value of the residence, as certified by an estate agent, i.e. the rental value of the property if let on the open market, subject to a limitation of 1/6th of contributable salary. In order to do this you will need to provide a current gross rental valuation of the property as certified by an Estate Agent. This will be subject to a limitation of 1/6th of contributable salary. The gross annual salary rate should also be provided.
  • As well as this, the annual Council Tax and costs of amenities (like heating, lighting and water) may be added to the calculation if these are provided free of charge.
  • Where a residential emolument is accepted by Teachers’ Pensions, pension contributions are payable on it, by both the scheme member and you from the date of occupancy of the property. This continues as long as the teacher remains in the property.

Additional Voluntary Contributions (AVCs) with Prudential

A teacher can pay additional contributions into the Scheme’s AVC provision with Prudential. This can be either as a percentage of salary or a set monthly amount. These must be remitted directly to Prudential Financial services.

Salary sacrifice

Members have the ability to opt for salary sacrifice arrangements under the Teachers’ Pensions Regulations 2014.

Only those salary sacrifice arrangements included in the School Teachers' Pay and Conditions Document can be included as pensionable earnings, and on which contributions will need to be paid.

A member can choose to give up part of their gross salary, which enables the following benefits to remain pensionable within the Teachers’ Pension Scheme:

(i) child care voucher or other child care benefit scheme;
(ii) a cycle or cyclist's safety equipment scheme; or
(iii) a mobile telephone scheme

Note that for an approved salary sacrifice scheme contributions should continue to be on the full gross pensionable salary before the salary sacrifice is applied. When providing service and salary information, the full salary prior to the sacrifice should be recorded on the Annual Return, MDC submission, TR28 Missing Service Template and/or the TR8 Leavers Template.

For unapproved salary sacrifice schemes the pensionable salary is after the application of the salary sacrifice and it is the reduced salary that must be used when determining contributions or reporting service and salary information.

Bonus and overtime payments

For school teachers, a bonus payment will be pensionable if it is part of a pay order and is applicable to all employees (or all employees of a particular class or description) at the establishment where the school teacher is employed.

For other members, a bonus under a pay settlement that applies to all employees (or all employees of a particular class or description) at the institution where the member is employed is pensionable. Additionally any payment made to the member that is calculated by reference to: the member’s performance; or the performance of all employees at the institution where they’re employed; or the performance of that institution is pensionable.

If a bonus payment is made to an employee, the contribution tier for the month in which it is made will include the bonus when deriving the annual salary. But it’s important to note that in the service return the annual salary will also have to annualise the bonus payment, i.e. multiple the bonus payment by 12 in the month in which it is paid in the service return. This is required to ensure that the member receives the full accrual for the bonus for which they have paid contributions.

If the bonus payment is not annualised in the month in which it’s paid the member will only receive one twelfth (1/12th) of the accrual in the case of an annual bonus. This is because of the way that Teachers’ Pensions systems calculate pensionable earnings based on service returns. Our systems treat it as a monthly salary rather than an addition on top of the annual salary.

For example, a member with a salary of £33,000 per annum receives a bonus of £1,200 in May 2016. In order to ensure that the member’s accrual of pension is based on the total pensionable earnings in the scheme year (£34,200), there are two options:

  1. Make the members salary £47,130 in the month in which the bonus was paid (£33,000 + (£1,200 x 365/days in the period, i.e. 31 in this case)); or
  2. Make the members salary £34,200 in each month or period of the service return but covering the entire scheme year (1 April – 31 March).

Pensionable pay elements

Since 1 April 2015, overtime payments are treated as pensionable for any members in the career average arrangements. Overtime is not pensionable for protected or tapered members who remain in the final salary arrangements.

But overtime must be included on any service and salary returns for all members, regardless of the scheme arrangements that a member is in. Overtime should be shown in the period it’s earned. This information is required for all members as some members may reach their transition date during a period of overtime.

Last Updated: 09/12/2021 16:10


Have you read our Monthly Data Collection FAQs?



See how members pensions are built and explore the available options.



Take a look at our Employer Portal guide.