5 Strategic Ways Teachers Can Supplement Their Pension Safely

Friendly guide only - not financial advice.

Most teachers know their Teachers’ Pension Scheme (TPS) is one of the better deals out there - but with bills rising and retirement feeling a long way off, it’s natural to wonder if it’ll really be enough. The good news? You don’t need to be a financial expert to build a stronger safety net. Here are five simple, low-stress ways to top up your pension that real teachers are already using.

Salary sacrifice & AVCs - the easy, “hands-off” top-up

Some schools and academy trusts let you pay a little extra each month into your pension automatically. It’s called salary sacrifice or an AVC (Additional Voluntary Contribution). The money comes straight out of your gross pay - before tax - so you get more value from every pound you put in.

Example: Jess, a classroom teacher on £40,000, added £80 a month to her AVC. Her take-home only dropped by about £60, but she’s now adding almost £1,000 more a year to her pension pot. It’s the kind of thing you set up once and forget about - like a slow cooker for your future self.

If your school doesn’t offer an AVC, ask HR about external options (Prudential, Standard Life etc.). Use our Budget Planner to see what you can comfortably afford, and check the Lump-Sum & Commutation guide if you’re close to retirement.

Lifetime ISAs & Stocks & Shares ISAs - flexible “side pots”

ISAs are like personal savings jars - you choose how much and when to put money in. For those under 40, a Lifetime ISA gives you a 25% bonus from the government. If you’re older, a Stocks & Shares ISA lets your savings grow tax-free over the years.

Example: Tom, a 35-year-old head of department, puts £100 a month in a LISA. The government adds £25, so he’s saving £1,500 a year towards retirement without even thinking about it. Unlike the TPS, he can access it earlier if life throws him a curveball.

The idea isn’t to gamble - it’s to give yourself a bit of flexibility outside the main pension. Just keep this money separate from your rainy-day fund and let it quietly grow.

High-interest savings - your short-term safety cushion

Before worrying about investments, it helps to have some boring-but-important cash saved. A high-interest account or Premium Bonds gives you quick access and peace of mind.

Example: Maria, a supply teacher, keeps £4,000 in a 5% easy-access saver. That’s about £200 interest a year - not life-changing, but it covers car repairs without dipping into her pension.

Aim for 3-6 months of expenses, then think about the long term. You can map this out easily using our planner.

Your tax-free lump sum - make it work for you

When you finally retire, you can usually take up to 25% of your pension as a tax-free lump sum. Many teachers use part of it to pay off debt, clear their mortgage, or help their children - but it can also become a small, reliable income pot for later life.

Example: Dave took £25,000 when he retired and divided it three ways: £10,000 into Premium Bonds for prize draws, £10,000 in a fixed-rate savings bond for steady interest, and £5,000 for travel and family treats. He still receives his monthly TPS pension, but now has a flexible reserve for any surprises that come up.

You can explore what your lump sum might look like with the Lump-Sum Calculator or our Pension Projection tool.

Property - don’t assume it’s the golden ticket

A lot of teachers dream of buying a rental property, but it’s not as easy as the TV shows make it look. Mortgage rates are higher, and being a landlord can mean dealing with broken boilers and tax forms at 10 pm.

Example: Clare and her partner bought a small flat to rent out. After repairs, agency fees and tax, the “profit” worked out at about £120 a month. It’s still useful income - but not the passive goldmine people talk about.

This article shares general information for teachers in England and Wales - not regulated financial advice. Always check official Teachers’ Pensions resources or speak to a financial adviser if unsure.