Teacher Pensions Indexation and 2021 Pay Freeze

Information about who might be affected in relation to their pensions

An issue has been identified concerning the Teachers’ Pay Freeze in 2021 which may affect a small number of teachers in relation to their pension.

This issue relates to teachers who have service in the Final Salary Scheme whose pension benefits are calculated against the higher of the average of the final year’s salary, or the average of the best three years in the last ten years (the average salary calculation).  Indexation is applied in the case of the average salary calculation to reach the actual salary figure that would be used, taking into account inflation.  Regulations only allow indexation to be applied in a financial year when there is a ‘pay event’ that the scheme administrator can apply indexation against (a pay increase or pay decrease). 

Who is affected?

This issue will not affect the majority of teachers, since those who have had a pay change since 1 April 2021, those who only have membership in the Career Average Scheme and those more than 10 years from retirement are not affected.

Those who may be affected are teachers and senior leaders who:

  • have service in the Final Salary Scheme (i.e. first joined the Teachers’ Pension Scheme prior to 1 April 2015); and
  • have not received any full-time equivalent pay increase during this financial year (i.e. have not received pay progression on their pay range in September, promotion onto a new pay range or a new allowance between 1 April 2021 and 31 March 2022).
  • See full Advice note on Teachers Pensions Indexation and 2021 Pay Freeze (pdf format, 365Kb) for further details and remedial action that needs to be taken. 

If you have any queries, please direct these to hradvicedesk@oxfordshire.gov.uk in the first instance.