1 in 6 teachers would prioritise an immediate salary increase over retirement benefits, new EPI research finds

The latest report by the Education Policy Institute (EPI), explores whether providing more flexibility over teachers’ pensions and remuneration could support improved recruitment and retention in the profession. EPI collaborated with Teacher Tapp to survey nearly 6,000 teachers to find out what they want from their compensation package and how valuable the current Teachers’ Pension Scheme (TPS) is to them.

The report finds that:

• Teachers prioritise immediate salary increases over retirement benefits. Teachers value a 10% increase in their retirement income only as much as a 6% increase in their current salary.

• A sizeable proportion of teachers would prefer more flexibility in their pension plans, with 15% of teachers willing to trade 20% of their pension income for a 10% salary increase. Currently, all teachers in state-funded schools are automatically enrolled in the Teachers’ Pension Scheme, with average contributions of 9.6% of their salary. However, the scheme lacks flexibility as teachers cannot choose their contribution rate or adjust it to suit their financial needs.

• Younger teachers, particularly those in their twenties, are two-thirds more likely to trade pension for salary than teachers in their fifties. Almost 1 in 5 teachers in their twenties would prefer a compensation package with a 10% salary increase, even if it meant switching to a DC pension and losing 20% of their retirement income. 

• Teachers who are financially struggling are a quarter more likely to want to trade pension entitlement for salary than teachers who are financially comfortable.

• Teachers strongly prefer a guaranteed retirement income over income dependent on stock market performance. EPI’s analysis finds that teachers are 22% less likely to choose a pay package tied to stock market performance over one that guarantees their retirement income. In fact, they are willing to give up 10% of their salary to keep that retirement security.

The report recommends that the government should:

• Permit schools to offer pension options: A substantial minority of teachers prefer to trade some retirement income for current salary, which is not currently possible within the TPS. Schools should be allowed to offer alternative arrangements to their staff, alongside the TPS, should they wish.

• Investigate the possibility of providing flexibility within TPS: The government should review the TPS with recruitment and retention in mind. It may be that, as with schemes such as the civil service pension scheme, there is room to offer more flexibility within the TPS and make teaching a more attractive profession to more people.

• Conduct research on policy options: Research should be conducted into the likely impact and consequences of various policy options, with the goal of offering a set of schemes that promote recruitment and retention, while still ensuring retirement security for teachers.

James Zuccollo, director for school workforce at EPI said: “Recruitment and retention are the central challenges facing the teaching workforce and they will not be solved without changes to teachers’ pay package. The 2.8% pay increase recommended by the Department for Education for next year is less than the current rate of inflation and will have little impact on the 10% fall in real pay since 2010.

“Offering some flexibility over teachers’ pension arrangements will not make up for teachers’ falling pay but it may mitigate some of the damage. The government needs to be open to innovations in teacher recruitment, and schemes such as United Learning’s proposal should be both welcomed and carefully studied.”

Background and methodology:

The teaching profession in England is facing significant challenges in recruitment and retention, with a third of teachers leaving within their first five years. This threatens education quality and workforce stability, compounded by a 14% decline in teachers’ real pay since 2010. Fiscal constraints have limited the government’s ability to offer substantial pay rises. While the government has committed to recruiting 6,500 expert teachers, this will be difficult without restoring pay parity with similar professions.

In response, United Learning, a multi-academy trust, proposed to increase teachers’ pay by up to 24% by allowing staff to exchange some pension contributions for additional salary, without raising costs. However, unions oppose the scheme and have called for it to be banned.

Last year, EPI and Teacher Tapp surveyed teachers on their interest in such a scheme.

The report is based on a survey conducted on 4 December 2024, via Teacher Tapp, with 5,751 usable responses from teachers in England. The survey presented teachers with choices between different compensation packages, varying in current salary, retirement income, and the certainty of retirement income. The data was then analysed using a statistical model to estimate the impact of each attribute on the probability of choosing a compensation package.

The full report can be read here.