At Those Who Can we are always being asked ‘If I leave teaching do I have to take a drop in salary?’
So we decided to create this blog with 4 practical reasons why leaving teaching might be more affordable than you think.
You know your annual salary but some variables mean your monthly take-home pay isn’t the equivalent of that of a job outside of teaching.
Understanding your Teaching take-home pay can help you make an informed decision regarding staying in teaching or leaving teaching.
This blog explores 4 key financial aspects that have an impact on your monthly pay.
If you’re a teacher, you’ve likely witnessed the headlines about a 6.5% pay increase in June. It might have seemed like a glimmer of hope amidst the ever-increasing cost of living.
However, if you’re contemplating a career shift, this news might have left you grappling with the financial uncertainty that often accompanies such a move.
Research by the National Federation for Educational Research (NFER) warns that leaving the teaching profession could result in a pay cut that takes up to four years to recover from. But the hit to your net salary might not be as severe as you might think.
Here are 4 reasons why;
- Pension Contributions Decrease
Teachers enjoy one of the most generous employer contribution pension schemes in both the public and private sectors, with employer contributions standing at a substantial 23.8%.
However, while your pension contributions are tax-deductible, the bitter reality is that you’re also making some of the most substantial percentage contributions in the UK job market.
This can significantly reduce your take-home pay compared to roles with lower pension contributions. The difference between your teacher pension contribution and the auto-enrolment pension that many other jobs offer could easily amount to a staggering 8.4% of your gross salary.
You should be carefully assessing the employee pension contributions offered as packages by potential employers.
- Lower Tax
The extent of this depends on your current teacher salary and the degree of pay drop you anticipate. If your teaching salary places you above the higher rate threshold of £52,270, you’re handing over 40% of your earnings above this in tax.
If you’re a seasoned teacher or working in London, transitioning to a lower-paying role may result in a sharp reduction in your annual tax contributions.
If you’re a Headteacher or a high-ranking figure in an academy chain, a substantial chunk of your salary is destined for Her Majesty’s treasury.
So the reality is that a salary reduction may be partly offset by a reduction in tax. It’s also worth noting that National Insurance contributions, calculated as a percentage of gross salary, will also decrease in a lower-paying position, providing some financial relief during your career transition.
- Student Loan Repayments
With 97% of teachers holding a degree the chances are, if you’re actively working in schools you’re shouldering some form of student debt, most likely in the form of a student loan.
Servicing this debt becomes a necessity if your teaching salary exceeds your student loan repayment threshold. For early-career teachers, this is a pressing concern.
Transitioning to a lower-paying job may see your monthly repayments decline or even vanish altogether, depending on the extent of your salary drop. If your salary falls below your loan type’s threshold, your repayments will be suspended, offering much-needed financial breathing space after leaving the profession.
Some potential employers might even contribute to your student loan repayments as part of their benefits package so it’s always worth checking what employers have on offer.
- Childcare Costs
Juggling a successful teaching career and family life is a constant struggle, exacerbated by the high childcare costs. While childcare is a necessity for working parents, the rigid school schedule often forces teachers to spend more for wrap-around care in the form of breakfast clubs and after-school activities.
A more flexible career might finally give you the freedom to do the school run and save costs.
So overall leaving teaching may come with a drop in salary, but the broader financial picture may be more favourable than you initially thought. Don’t forget the potential savings on commuting and travel costs, as well as additional perks like performance bonuses, equity, or share options in an alternative career.
You might even enjoy dental and medical care as part of your benefits package, offering financial relief and swift access to healthcare when you need it most. And for the first time in your adult life, you might be free to take holidays during term time, saving a small fortune on travel expenses.
If you’re a teacher contemplating a move outside the classroom, use our Those Who Can Salary Calculator to assess the real difference in your take-home pay between your current teaching job and that of a specific job outside of teaching.
Plus:
Free downloadable Excel spreadsheet Those Who Can Budget please feel free to share with others.
