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Shane McEvoy
Shane McEvoy runs Flycast Media, a specialist financial digital marketing agency in the city.
I was at a coffee shop recently when I ran into an old friend. He spent most of his career in construction: good money, long hours, the kind of work that leaves a mark on your body. We got chatting and he mentioned, almost in passing, that he’d moved into lecturing at a Further Education college.
He teaches around 24 hours a week – contact hours, not total working time – takes home about £600 a week, and freely admits it’s a step down in pay from construction. So I asked the obvious question: why do it?
“The pension,” he said, without a moment’s hesitation.
He told me he puts about £200 a month into his pension. Then he asked me to guess what the college tops it up by. I said £270 – already thinking that sounded incredibly generous, bordering on over the top. He shook his head.
Nine hundred pounds. The college adds £900 a month on top of his £200.
I’ll be honest: I didn’t believe him. I run a digital marketing agency – Flycast Media – that works almost exclusively with financial services firms, so I spend more time than most looking at financial data and how money actually moves around the economy. And still, £900 sounded like it had to be wrong. So I went home and looked it up.
It wasn’t wrong.
The numbers are real
Most teaching staff in FE colleges are enrolled in the Teachers’ Pension Scheme (TPS) – a defined-benefit arrangement backed by the state. This isn’t a standard workplace pension where contributions go into a pot invested in funds. It’s a guaranteed income in retirement, calculated by formula, inflation-proofed for life, with the risk sitting with the taxpayer rather than the individual.
The employer contribution rate for TPS is currently 28.68 per cent of pensionable pay – a figure confirmed by Teachers’ Pensions, which rose from 23.68 per cent in April 2024. Employee contributions run at around nine to 10 per cent of salary on average, depending on income band. On a gross salary of around £37,000, the college would be paying roughly £10,600 a year – around £880–900 a month – straight into the scheme. So the broad scale of my friend’s figure was right, even if rough net pay and contribution estimates can vary depending on salary, tax code, and exact deductions.
The college doesn’t set this rate and can’t negotiate it. It’s mandated nationally. And since the 2024 rate increase, the Department for Education has been paying colleges a grant specifically to cover the higher employer contribution – meaning the real bill isn’t falling on the college at all. It’s falling on the taxpayer.
When I asked him whether it was a defined-benefit scheme, he wasn’t sure what that meant. He just knew the number. And honestly, can you blame him? If someone told you your employer was adding £900 a month to your pension for every £200 you put in, you probably wouldn’t spend much time worrying about the technical classification either.
The ‘£300,000 pot’ that isn’t a pot
My friend reckons 10 years in the job will leave him with the equivalent of a £300,000 pension pot. That overstates it, though there is still no actual pot. What he’ll have is a guaranteed, inflation-linked annual income – roughly £6,500-£7,500 a year in today’s money, depending on salary progression and revaluation, based on the scheme’s formula. To buy that kind of guaranteed income on the open market through an inflation-linked annuity, you’d more likely need something closer to around £150,000–£190,000 in capital at current rates, not £250,000–£300,000. So the original shorthand was too high.
The crucial difference is that in a private pension, that capital actually exists and is subject to market risk. In the TPS, the promise is backed by the state regardless of what markets do or how long he lives. It’s a fundamentally different – and fundamentally more valuable – kind of security. And the cost of underwriting that promise falls on everyone else.
Now multiply it across the whole public sector
FE colleges alone spend around £360 million a year on TPS employer contributions and around £240 million on the Local Government Pension Scheme for non-teaching staff – roughly nine per cent of the entire sector’s income, just on pension employer contributions.
Zoom out further and the numbers are hard to absorb. The exact national total depends heavily on the accounting method being used, so these figures need to be handled carefully. What can be said securely is that public sector pension promises amount to a very large long-term liability, while annual cash payments to pensioners are also substantial. For comparison, planned UK defence spending for 2025–26 is about £62.2 billion, while policing funding in England and Wales is around £19 billion.
The Institute of Economic Affairs has argued that even these figures understate the true cost – that the government effectively keeps two sets of books on pension liabilities, with the real annual undeclared cost running some £57 billion above what’s officially reported.
Meanwhile, the private sector gets three per cent
Under auto-enrolment, the minimum employer pension contribution in the private sector is three per cent of qualifying earnings. Even genuinely generous private employers rarely go above 10 per cent. The idea of your employer mandatorily contributing nearly 29 per cent of your pay into a guaranteed, state-backed, inflation-linked pension simply does not exist in the private sector outside a handful of legacy schemes that have been closed to new members for years.
Two workers on the same £37,000 salary – one in the Teachers’ Pension Scheme, one in a standard private scheme with eight per cent total contributions – will retire in profoundly different circumstances. The private sector worker accumulates a pot worth perhaps £35,000–£40,000 over 10 years, subject to market performance and whatever annuity rates look like when he or she retires. The TPS member walks away with a guaranteed, inflation-proofed income for life worth the equivalent of around £150,000–£190,000 in capital terms, backed by HM Treasury.
The gap is not marginal. It’s enormous. And the cost of it isn’t borne by the teacher, or by the college. It’s borne by every working person paying tax in this country – including the majority who will never come close to anything like it.
We’re looking in the wrong direction
I’m not having a go at my friend. He made a completely rational decision – looked at the incentives in front of him and acted accordingly. That’s what sensible people do. Nor am I suggesting teachers don’t work hard or don’t deserve decent pensions. The issue isn’t individual, it’s structural.
The issue is that political and media scrutiny of public spending tends to fixate on welfare claimants, benefit fraud and SEND budgets. These are legitimate areas of debate. But the public sector pension system – where an FE lecturer can accumulate a pension promise worth the equivalent of around £150,000–£190,000 in capital terms over a decade, with the bulk of the cost quietly underwritten by taxpayers – barely features in the conversation.
My friend swapped a hard hat for a classroom partly because the pension deal on offer is, frankly, extraordinary. The question worth asking is why that deal exists at such a scale, who’s paying for it, and why we spend so much time arguing about the wrong line items while this one quietly compounds in the background.
This article was originally published by the Daily Sceptic.
