Summary

A career average pension UK members earn revalues each year's accrual rather than using final salary.

Major public sector schemes — NHS 2015, Teachers' 2015, Civil Service Alpha, LGPS 2014 — operate on this basis.

Accrual rates and Revaluation indexes vary by scheme; the McCloud remedy gives transition members a choice for service from 2015–2022.

Key Takeaways

• Career average pensions calculate each year's accrual on that year's pensionable pay.
• NHS 2015 builds pension at 1/54 each year; Teachers' 2015 at 1/57; LGPS 2014 at 1/49; Civil Service Alpha at 2.32%.
• Each year's slice is revalued annually until retirement, usually by CPI plus a fixed Margin or by Treasury order.
• USS includes a career average defined benefit section with a salary threshold above which DC applies.
• Career average schemes spread risk across the career rather than concentrating it in final pay.
• The McCloud judgment gives members in service between 2015 and 2022 a deferred choice of benefits.

Career Average Pension Explained: How Public Sector Workers Build Retirement Income

A career average pension UK members accrue is a form of defined benefit pension that, unlike final salary, builds entitlement year by year on actual Earnings in that year. Each annual slice is then revalued until retirement so that earlier service is not unduly eroded by Inflation or by promotion late in a career. This design now underpins most of the UK public sector and several large private sector schemes.

This article explains the mechanics of CARE schemes, walks through accrual rates and revaluation methods in the major public sector arrangements as of 2025/26, and outlines how the McCloud remedy interacts with members who were close to retirement when the schemes were reformed.

How a Career Average Pension Works

A career average revalued earnings (CARE) scheme awards pension each year based on a fixed accrual rate applied to that year's pensionable pay. For instance, if a member earns £35,000 in a year and the accrual rate is 1/54, that year buys £648.15 of annual pension. The next year, a different salary produces a different slice. Each slice is revalued annually thereafter.

Across a 40-year career, the sum of revalued slices forms the member's total annual pension at retirement. Unlike final salary, CARE rewards consistent contributions over a long career and is less skewed by promotion in the final years.

Major UK Career Average Schemes

NHS Pension Scheme 2015

The NHS 2015 scheme is a CARE arrangement with an accrual rate of 1/54 of pensionable earnings each year. Earnings include basic salary and certain allowances. Revaluation is set in line with Treasury orders, currently CPI plus 1.5% for active members.

Following the McCloud remedy, eligible members can choose, on retirement, whether service between 1 April 2015 and 31 March 2022 sits in the legacy 1995/2008 final salary section or the 2015 CARE section.

Teachers' Pension Scheme 2015

The Teachers' 2015 scheme accrues at 1/57 of pensionable earnings each year, revalued in service by CPI plus 1.6%. Normal pension age is linked to State Pension age.

Civil Service Alpha

Civil Service Alpha builds pension at 2.32% of pensionable earnings each year (roughly 1/43). It is revalued in service in line with CPI; deferred pensions are revalued by CPI only.

Local Government Pension Scheme 2014

The LGPS 2014 (England and Wales) and LGPS Scotland 2015 are CARE schemes with a main section accrual rate of 1/49 and a 50/50 option (1/98 at half the contribution rate). In-service revaluation tracks CPI.

USS Career Average Section

USS, the main pension for UK universities, provides a career average DB benefit up to a salary threshold, above which contributions go into a DC Investment Builder. The accrual rate and revaluation terms are set by USS trustees and have changed several times in response to scheme funding.

Revaluation: How Each Year's Slice Grows

In-service revaluation applies while a member is still accruing. Different schemes use different measures: CPI plus a margin (NHS, Teachers') keeps active members' accrued benefit growing in real terms; CPI alone (LGPS) protects against inflation but does not exceed it.

Deferred revaluation applies once a member leaves active service. Statutory minimum revaluation under the Pension Schemes Act 1993 normally applies CPI, capped where set by the rules. The difference between in-service and deferred revaluation is one reason continuous service is valuable.

Contributions and Costs

Member contributions in public sector CARE schemes are tiered by salary. For 2025/26, NHS member contributions range from around 5.2% to 12.5% depending on pensionable earnings, with similar tiered structures in Teachers' and LGPS. Employer contributions are set by scheme valuations and are substantially higher than typical private sector employer contributions.

Salary sacrifice is not generally available for public sector CARE contributions, but tax relief operates automatically through PAYE. The annual allowance still applies, with the deemed pension input amount calculated as 16 times the increase in pension, plus any AA-related lump sum increase.

The McCloud Judgment and 2015 Reforms

The 2015 reforms moved most public sector schemes to CARE benefits with State Pension age normal pension ages. Older members were given transitional protection that allowed them to remain in legacy final salary schemes for longer. In 2018 the Court of Appeal (McCloud) ruled this transitional protection was age discriminatory.

The remedy requires schemes to give all affected members a deferred choice covering the 'remedy period' (1 April 2015 to 31 March 2022). At the point benefits crystallise — usually retirement — members compare what the legacy and reformed schemes would pay and select the more valuable option for that period. Tax adjustments and lump sum recalculations may also apply.

Death, Ill-Health and Family Benefits in CARE Schemes

CARE schemes provide structured death and ill-health benefits broadly comparable with legacy DB sections. Active member death typically triggers a lump sum (commonly twice or three times annualised pay) plus an ongoing survivor's pension at a percentage of the member's accrued entitlement.

Ill-health early retirement in CARE schemes generally has two tiers — partial and full — with enhanced service or accrual added where the medical evidence supports it. Members should consult their scheme handbook for exact eligibility tests.

Why CARE Schemes Are Still Valuable

A career average pension UK members earn still delivers the core DB promise — a guaranteed inflation-linked income for life — but spreads risk and reward across a career rather than concentrating it in final salary. For workers with flat or non-linear career paths, CARE can be more generous than the old final salary equivalent.

Combined with the new State Pension full rate of £230.25 per week in 2025/26, a public sector CARE pension can provide a substantial retirement income floor. MoneyHelper, Pension Wise and scheme administrators provide free information, and FCA-authorised advisers can help integrate CARE benefits with any private DC savings.