Your teacher’s pension is an important part of your remuneration package and a well deserved benefit.

You may find it useful when planning for the future to:

• know What retirement benfits you can achieve
• how you can increase your pension benefits and
• understand the retirement process including phased retirement.

Qualification period

• To qualify for retirement benefits you must normally have two years’ pensionable teaching service.

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Types of retirement

Normal Age Retirement

• Age retirement benefits are payable when you reach Normal Pension Age (NPA) or from the day after you leave pensionable employment (whichever is the later).
• If you continue in teaching after your 75th birthday, further service cannot be treated as pensionable and retirement benefits are payable from your 75th birthday.
• If you want to receive a lump sum then your benefits must be paid before you reach age 75.

Phased retirement from age 55

• You may take phased retirement without having a break in employment provided that your pensionable salary will reduce by at least 25% for a minimum of 12 months.
• An application for phased retirement must be made within 3 months of starting employment in a reduced capacity.
• This could, for example, be because you have taken up a post of lesser responsibility or because you are working reduced hours.
• You will need to discuss this arrangement with your employer and they will be required to provide confirmation of the salary reduction on your application form.
• You may exercise this option twice before final retirement.
• You can decide how much you wish to take of the benefits you have accrued up to the commencement of phased retirement, up to a maximum of 75% of your total benefits.
• Remaining service, which must be at least 25%, will be aggregated with the subsequent service you accrue being used in any future benefit calculations.
• You may take phased retirement if your new appointment is a support role such as a classroom assistant and your appointment is in an educational establishment covered by the TPS.

Premature retirement

• Retirement benefits may be paid if you are:
  • a) 50 or over; or
  • b) 55 or over and joined the scheme on or after April 2006; or
  • c) 55 or over for all members from April 2010
    
    
  and your employer certifies that your pensionable employment has been terminated because of redundancy or in the efficient discharge of the employer’s function

• There is no automatic right to premature retirement; it is at the discretion of your employer who must agree to the payment of premature retirement benefits and agree to pay a statutory share of your retirement benefits from the TPS.
• This element is called ‘mandatory compensation’.
• If you have any queries about premature retirement arrangements, you should discuss them with your employer. Remember that your employer will be responsible for paying a portion of the pension and lump sum.

Actuarially Reduced Benefit (ARB)

• You may claim retirement benefits if you are 55 or over, under NPA and have been in pensionable teaching employment on or after 30 March 2000 and leave employment.
• If you are applying for ARB and you are still in pensionable teaching, you must leave that employment with the consent of your employer before you can access your retirement benefits.
• Employers cannot withhold their consent for longer than six months from the date on which you request to leave.
• ARB is paid from the day after the last day of pensionable employment.
• If you are not in pensionable employment, you may choose the payable date, but benefits will not be paid any earlier than six weeks after the date you signed the application form.
• The actuarial reduction will apply throughout the time your benefits are in payment.

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How retirement benefits are calculated

• If you were a scheme member (existing member) before 1 January 2007, your benefits are made up of an annual pension and a lump sum that are calculated using your pensionable service and average salary.
• If you became a scheme member (new entrant) on or after 1 January 2007, you will receive only an annual pension although you may give up part of your pension in favour of a lump sum.
• There are transitional arrangements for existing scheme members who were out of service prior to 1 January 2007 and who re-enter the scheme after that date.

Pension

• Existing member – the pension is 1/80th of the average salary for each year of pensionable service. The pension is taxable.
• New entrant – the pension is 1/60th of the average salary for each year of pensionable service. The pension is taxable.

Lump sum

• Existing member – the tax-free lump sum is 3/80th of the average salary for each year of pensionable service. If you have pensionable service on or after 1 January 2007 you may increase this lump sum by converting £1 of pension, which will increase your lump sum by £12.
• New entrant – there is no automatic lump sum, however, to get a lump sum you can convert £1 of pension for £12 of lump sum.
• You can convert up to 25% of your total pension benefits.

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Increasing your benefits

Additional pension

• You can only buy additional pension while you are in pensionable employment and under NPA.
• You can buy an additional pension up to a maximum pension of £5,000 per annum. You can do this at different times in multiples of £250.
• You can pay by a lump sum or a regular monthly payment.
• Any installment period must be completed before you reach NPA.
• Installment payments will be subject to periodic review and may change during the period of the installments.
• You have the option to buy personal benefits only or personal benefits and partners’ benefits.
• It is not possible to buy partners’ benefits only.
• If you leave pensionable employment before completing an installment plan, you will have the opportunity to pay the balance in a lump sum within 30 days or take a paid up credit.
• If you retire before completing an installment plan you will receive a pension based on the contributions you have paid.
• If you retire on health grounds before completing an installment plan, you will receive the full value of your additional pension provided that TP receive a valid health declaration at the start of the payment period and the payments have been made for more than 12 months.
• Additional pension benefits are index-linked from the date of the first contribution.
• Additional pension benefits are affected by any re-employment abatement.
• If you have arranged to purchase additional pension for your partner, then a pension will be paid to your surviving partner on your death.
• If you die and have only arranged to purchase additional pension for personal benefits no additional death benefits will be paid/nor will any contributions be refunded.

Additional Voluntary Contributions (AVC)

• To increase your own benefits or survivor benefits you can pay Additional Voluntary Contributions (AVCs).
• The money you pay is invested for you by the AVC Company and the benefits you receive depend on the value of the investment and the cost of annuities when you retire.
• You can take 25% of the fund value as a tax-free lump sum.
• AVCs do not increase the benefits you receive from the TPS. They are a separate arrangement.
• Prudential is the AVC provider for members of the TPS, but you can choose to make arrangements with any other provider.

Other pension arrangements

• Members of the TPS may contribute to any other pension arrangement as well as contributing to the TPS.

Teachers IFA are fully conversant with the best ways in which to improve your retirement benefits. As Independent Financial Advisers, we have access to all providers products. 

Index-linking

• Your pension will be increased annually each April in line with the Retail Prices Index (RPI), in order to maintain its purchasing power.
• The rate of increase will not mirror any rate of increase in teachers’ pay; it may be higher or lower.
• If your pension is paid before your 55th birthday, this increase will not be paid until after that birthday unless you are incapacitated in which case benefits are increased annually regardless of your age.

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Retirement Benefits & Planning

Teachers IFA is a trading style of Laurel Court Associates Ltd. which is authorised and regulated by the Financial Services Authority (FSA No. 231749)