Should You Aim for Promotion in Your Final Years?
(This article is for information only and not financial advice.)
As retirement approaches, many UK teachers wonder if seeking a promotion or pay rise in their last few working years will significantly boost their pension. The answer depends on which part of the Teachers’ Pension Scheme you’re in and involves weighing financial gains against personal well-being. This article explains how late-career pay progression affects final salary pensions and the newer career average (CARE) pensions, and explores whether aiming for promotions (e.g. moving to UPS, taking on a TLR, joining the SLT or other leadership roles) in your final 3–5 years is financially advantageous. We’ll also discuss risks, caveats (like part-time work or breaks in service), and non-financial factors such as stress and work-life balance.
Final Salary Pension Schemes and Late-Career Pay Progression
Many long-serving teachers have accrued benefits in the Final Salary scheme (which closed to new accruals in 2022). Under this scheme, your pension is calculated based on your length of service and your average salary at retirement.
Crucially, the calculation is based on either:
- The average salary over the last 365 days of pensionable service, or
- For service before 2007 only, the best consecutive three years of pensionable salary in the last 10 years, revalued for inflation.
The “best 3 in 10” rule no longer applies to service after 2007. For post-2007 service, the calculation is based solely on the salary in the final 12 months of service. However, if you have a mix of pre- and post-2007 service, the Teachers’ Pension Scheme will use the calculation that gives you the highest benefit.
This means that promotions or pay increases in your final year can have a significant impact on your final salary pension — especially if they affect the final salary link for earlier service. Teachers nearing retirement can still benefit from salary increases, but the mechanics differ depending on the date and type of service.
How Pay Progression Affects the CARE (Career Average) Scheme
Since 2015 (and from 2022 for all active members), the CARE scheme has been the standard. Each year, you build up a pension worth 1/57th of your pensionable earnings for that year, revalued annually at CPI + 1.6% while active.
This structure means your pension is built up year by year, with no special emphasis on your final salary. So, a pay rise close to retirement improves only those final years — it doesn’t affect earlier years. Late-career promotions will improve your pension, but only proportionally based on how many years you serve at the higher salary.
Example: salary rises from £40,000 to £45,000 for your final three years. Accrual per year rises from ~£701 to ~£789. Over three years, your annual pension increases by ~£264 (plus revaluation) — helpful, but far less dramatic than a final salary scheme.
Split Benefits: Maximising Both Final Salary and CARE Pension
Many teachers retiring in the 2020s will have accrued pension under both schemes. In this “split” situation, a promotion in your final years can:
- Boost the final salary portion by raising your “final average salary” at exit.
- Increase the CARE portion slightly for the remaining years at the higher salary.
This makes late-career progression especially valuable if you still have final salary benefits linked to your exit pay. The more years you worked before 2015 (or before 2022 for protected members), the more impact a pay rise can have.
Is It Worth Seeking Promotion in the Final Years?
If you have Final Salary benefits: Late-career promotion can significantly raise your pension. Even one year at a higher salary can lift your annual pension for life, since it applies across earlier service. UPS moves, TLRs, or leadership roles can be worth thousands per year.
If you’re mostly in CARE: The benefit is smaller and more gradual — improvements only for the years at the higher rate. Still, an extra ~£200–£500 per year in pension is possible over a few higher-paid years.
If you have split benefits: A promotion helps both parts — immediate uplift to final salary pension and incremental CARE gains — often the most advantageous setup.
Non-Financial Considerations: Stress, Satisfaction, Lifestyle
- Stress & workload: Senior roles add pressure/responsibility; weigh health and wellbeing.
- Job satisfaction: Some thrive on leadership, others prefer classroom focus.
- Work-life balance: Will a promotion reduce personal time in the run-up to retirement?
Other Caveats: Part-Time Work and Service Gaps
- Part-time work: Service is prorated in both schemes. Final salary uses FTE salary (not reduced), but service length is.
- Stepping down: Within the last 10 years, a higher eligible previous salary can still be used for final salary calculations.
- Breaks in service: A break > 5 years can sever the “final salary link”. On return, earlier service may be based on your old leaving salary revalued by CPI, not your new salary.
Planning your last 3–5 years?
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Conclusion
Promotions close to retirement can be financially worthwhile — especially if you have final salary benefits. CARE rewards steady progression more than last-minute jumps, but late promotions still help. With split pensions, promotions often deliver a double benefit.
Balance the money with wellbeing, satisfaction, and goals. Some teachers value calmer roles more than extra pension; others are energised by the chance to lead.
This article provides general information only and is not financial advice. Consider independent financial advice and official Teachers’ Pensions resources.