Guidance

Teachers' pension scheme employer contribution grant: further education providers academic year 2026 to 2027

Updated 8 July 2026

Applies to England

Introduction 

This grant provides funding to further education (FE) providers to cover increased employer contributions to the teachers’ pension scheme (TPS).

It covers the:

• rate change from 16.4% to 23.6% in September 2019
• increase to 28.6% in April 2024
• change to 17.6% from April 2027

The funding for this started in the 2019 to 2020 academic year. This guidance confirms the arrangements for the 2026 to 2027 academic year.

Change for 2026 to 2027

From April 2024, institutions reported employer contributions at the 28.6% rate. This has allowed us to simplify:

• the calculation we use to generate your funding allocation
• how we present this information on your funding statement

Read Calculating and making payments for full details.

July 2026 update

The government has announced that, from April 2027, employer contribution rates for the TPS will decrease from 28.6% to 17.6%.

Funding for colleges and other eligible further education settings will be reduced from 1 April 2027 to reflect the decrease in pension costs.

Since the rate is currently 28.6%, the grant is helping with the extra costs of a 28.6% rate compared with the pre-2019 rate of 16.4% rate (12.2 percentage points). From April 2027 when the TPS employer contribution rate will reduce to 17.6%, the grant will only need to help with the gap between 16.4%, and the new 17.6% rate (1.2 percentage points). 

As a result, from April 2027, the level of support provided by this grant each month will reduce by just over 90%.

This adjustment to reflect pension valuation is not expected to have any net impact on settings’ ability to employ staff or invest in students’ education nationally. While there may be variation at individual setting level, the overall effect will be cost-neutral.

Eligibility

The following types of FE institutions participate in the TPS:

• general FE colleges
• sixth-form colleges
• designated institutions (including the new designated institutions that form part of higher education (HE) provider group structures)
• special post-16 institutions

These institutions will receive extra funding for increased employer contributions in each academic year covered by this grant if:

• they receive 16 to 19 and or adult skills funding for the same period and
• data from the relevant financial year shows they paid into the teachers’ pension scheme

We will treat colleges converting to academies before the start of the payment period as an academy, and they should refer to the  Teachers’ pension scheme employer contribution grant for maintained schools and academies with 16 to 19 provision. We will treat those converting during a payment period as an academy from the next appropriate payment point.

Calculating and making payments

2026 to 2027 academic year 

We will use the financial year 2024 to 2025 audited payments made by providers to Capita for the TPS to calculate funding. 

September 2026 payment

For the first part of the academic year, the grant provides funding for the difference between the employer contribution values for 2026 to 2027 at the original calculated rate (16.4%) and the rate from 1 April 2024, that will end on 31 March 2027 (28.6%).

For the September 2026 payment, we:

1. Calculate a 16.4% value from the 28.6% value.
2. Uplift both the 28.6% value and the calculated 16.4% value by 5.2%.
3. Further uplift the amounts calculated at 2 by 3.3%, to reflect estimated average earnings increases in 2025 and 2026, respectively.
4. Multiply the result of 3 by two-thirds (66.67%), to calculate the amount we will pay to institutions in September 2026.

We use the estimated average increases in earnings from the November 2025 economic and fiscal outlook published by the Office for Budget Responsibility (OBR). This calculates an indicative employer contribution value for 2026 to 2027 by accounting for changes in earnings between 2024 to 2025 (source data year from Capita) and the academic year  for the grant, 2026 to 2027. 

April 2027 payment

From 1 April 2027, the new rate of 17.6% will come into effect and impact the amount we pay in April 2027 for academic year 2026 to 2027. 

For the April 2027 payment, we will

1. Use the employer pension contributions made at a rate of 28.6% to calculate an adjusted annual total based on a rate of 17.6%.
2. Uplift that calculated 17.6% value and the calculated 16.4% value by 5.2%.
3. Further uplift the amounts calculated at point 2 by 3.3%, to reflect estimated average earnings increases in 2025 and 2026, respectively.
4. Calculate the difference between the expected revised annual costs at 16.4% and 17.4% from 3.
5. Multiply the result of 4 by one-third (33.33%), to calculate the amount we will pay to institutions in April 2027.

Impact of 1 April 2027 rate change on institution allocations

We will pay the academic year 2026 to 2027 FE teachers’ pension scheme employer contribution grant (TPSECG) funding in 2 instalments, though each instalment has been calculated differently. The overall impact of the different approaches means that all institutions may expect the amount:

• paid in September 2026 for the 8-month period from August 2026 to March 2027, inclusive, will equate to approximately two thirds of the initial ‘FE TPSECG (difference between revised annual cost at 28.6% and revised annual cost at 16.4%)’ figure that was communicated in the initial academic year 2026 to 2027 funding statements (from spring 2026)
• that will be paid in April 2027 for the 4-month period from April to July 2027 will equate to one third of the difference between the revised annual cost 17.6% and the revised annual cost at 16.4%

2026 to 2027 funding statements will show the full calculation used to generate the allocation based on ‘FE TPSECG (difference between revised annual cost at 28.6% and revised annual cost at 16.4%)’. In addition, the amount that has been deducted from the allocation as a result of the new methodology will be shown  an ‘Exceptional adjustment’ in 2026 to 2027 funding statements.

Overall, institutions may expect to receive approximately 70% of the initial ‘FE TPSECG (difference between revised annual cost at 28.6% and revised annual cost at 16.4%)’ figure that was communicated to them in their initial academic  year 2026 to 2027 funding statements (issued from spring 2026).

Where institutions have merged, we combine the payments made and associate them with the new institution.

We previously confirmed FE TPSECG payment amounts for academic year 2026 to 2027 based on the 28.6% contribution rate for the full academic year to eligible institutions. We communicated funding amounts for any other institutions by email. Revised allocation statements and emails will be issued to institutions in September 2027 to confirm their recalculated funding for the year.