The Teachers’
Pension Scheme
And what we hope you’ll get out of it.
Today’s session
It’s a basic overview. Pensions are complex and so we can’t squeeze all the finer details into this session. If you want to know more, our website will give you more in depth information: www.teacherspensions.co.uk
We want you to understand the value of your pension, how we manage it and how we can help you get more from the scheme.
Who we are
& what we do
Scheme background
Making your pension work for
you
Life changes
Planning for your retirement
Teachers’ Pensions; who we are and what we do
Who we are
We’re responsible for administrating the Teachers’
Pension Scheme on behalf of the Department for Education.
We manage the second largest Public Sector Pension Scheme in England and Wales with over 1.6 million members, and this is growing all the time.
1.6m
number of members in the scheme
2nd
largest public sector pension scheme
What we do for you
We can’t alter your contribution levels, we can’t adjust your working hours, but we can change the way we work together to manage your pension.
We are experts in our product, but also know we can learn from you.
We will make every effort to help you understand and
appreciate the value and quality of your pension
scheme, and will equip you to manage that pension in
support of your personal retirement goals
This is how we earn your trust.
We engage in ways that best meet your needs, honestly, with transparency, without using
jargon or being impatient.
We operate what we call a channel of choice. That means you can contact us via the best method for you.
Keep in touch
Talk to your employer Talk to us
Visit our website
www.teacherspensions.co.uk
If you want to access your
pension information online, it’s there.
If you want to call us, you can.
If you want to discuss your
pension with your employer, go ahead.
It’s your pension, manage it in the way that suits you best.
Through My Pension Online, you can:
1.See the current value of your pension 2.Update personal information
3.Nominate and update recipients of death benefits
4.Purchase additional pension credits 5.Opt out
6.Apply for NPA/AAB retirement
7.Send secure emails to us and receive communications and information
To access these facilities please first register at www.teacherspensions.co.uk
My Pension Online
My Pension Online is our secure portal where you can manage your pension online (the clue’s in the name!)
Scheme
background
The main benefits of your pension
You receive guaranteed benefits through
the Teachers’
Pension Scheme – and membership is
automatic but not compulsory
Your employer makes generous contributions
into your pension on your behalf
It's a Defined Benefit Scheme, based on your salary and service rather than investments
The value of your
pension is calculated by using your final average salary and adding
together all your periods of service
Your pension will be a regular source of income when you retire – but you can also take some of it as a tax-free lump sum
More good things you should know about your pension
If you’ve a family or other dependants,
your pension may give them an income
after you die
Your pension is index-linked,
so it’s protected against rises
in inflation
If you’re sick and are entitled to ill health benefits, you’ll get them as soon as possible
To boost your pension benefits you may be able to make extra contributions
You may be able to transfer credits from other pension
schemes you’ve contributed to
Who’s eligible?
If you’re in a role your employer deems to be applicable, you’re automatically entered into the scheme.
Entry is automatic, but not compulsory.
To qualify for retirement benefits, you must complete:
• Two years of pensionable
employment after 5 April 1988; or
• A total of five years’ pensionable employment at any time
What’s in it for me?
You contribute a percentage of
your salary (before Tax & NI)
Employer adds a further 14.1%
(that’s generous by
the way!)
Guaranteed pension when you retire
• Isn’t affected by
fluctuations in the economy
• Index linked
• Option to take tax free lump sums on retirement
Making your pension work
for you
When can you retire?
Member before 1 Jan 2007?
Became a member after 1 Jan 2007?
There are some exceptions If you were a member before 1 Jan 2007, but had a break of more than five years, your NPA remains at 60 for service up to the end of the break in service.
But it will be 65 for any future service. In pension terms you’ll be classed as a
‘member with mixed service’.
Your Normal Pension Age (NPA) all depends when you started your pensionable career.
Aged 60 Aged
65
How we calculate your pension
Your Teacher’s Pension is a classed as a Defined Benefit Scheme, so it’s based on your salary and service
Your pension benefits Salary
Service This is different to
Defined Contributions schemes, where the pension would be based
on the value of the contributions made and
how those investments have performed.
What will your pension be worth?
Members who joined the scheme before 2007:
Members who joined the scheme after 2007
If you don’t get a lump sum, you can convert part of your annual pension to get one.
If you already get a lump sum, you can convert part of your annual pension to get more.
Now for the maths
(We’ve simplified this a bit, but if you want the finer details, you can stay behind after class)
Final Average
Salary
Service 80 pension Annual (3x annual Lump Sum
pension)
and you get..
Final Average
Salary
Service 60 pension Annual
Final average salary is calculated by using the higher of:
What do we mean by final average salary?
The pensionable salary received in the last 12 months of employment
before the date of retirement (subject to
an excessive salary check)
The average of the best three consecutive
years salaries index linked in the last ten
years
or
For a member who has an NPA of 60
£32,160.20 26.441 80 (NPA 60) = £10,629 pension
= £31,887 lump sum
A member has 26 years & 161 days of reckonable service and final average salary of £32,160.20
If the member was to convert the maximum, it would mean their annual pension would decrease to £8,542 but the lump sum would increase to
£56,940. £0
£10,000
£20,000
£30,000
£40,000
£50,000
£60,000
Pension Lump Sum Pension Lump Sum
NPA 60 NPA 60 (convert lump sum)
For a member who has an NPA of 65
A member has 26 years & 161 days of reckonable service and final average salary of £32,160.20
If the member was to convert the maximum, it would mean their
pension would reduce to
£9,111 and they would receive a lump sum of
£60,736.
£32,160.20 26.441 60 (NPA 65) £14,172.76 pension
£0
£10,000
£20,000
£30,000
£40,000
£50,000
£60,000
£70,000
Pension Lump Sum Pension Lump Sum
NPA 65 NPA 65 (convert lump sum)
Our pension calculator
www.teacherspensions.co.uk
Converting your pension into a lump sum
•Rate of £12 lump sum for every £1 of annual pension surrendered
•There will be limit on the amount of pension you can convert
•It involves some fairly complicated maths, but if you want to find out how much you could get, visit our web site and use our calculators
•It would also be worth talking to your Financial Advisor to see what’s best for you
Here’s the small print
Adding to your pension benefits
If you want to, you can transfer your pension credits from a previous
scheme into your teacher’s pension. You must apply for a transfer within one year of entering
pensionable teaching service.
You can also increase your retirement benefits by
paying extra contributions
by: Your Added Pension Benefits
Paying into another registered
pension scheme Paying
additional voluntary contributions (AVCs) through
the Prudential
Purchasing additional pension
Death Grant
Death Grants
Will be paid in the following circumstances:
• Death in service – 3 x average salary
• Death out of service before retirement - 3/80ths of final salary for each year of service • Death after retirement –
5 x annual pension, less pension already paid
Nominate a recipient
If you’re married or in a civil partnership, your partner will automatically receive your Death Grant when you die.
However, if you’re not married, or would rather your Death Grant
went to someone else, you’ll need to nominate them. You can
nominate more than one person.
It’s up to you to review your
nomination periodically to make sure your wishes are current.
In the event of your death, a Death Grant will be paid
Short term pension benefits
• Equivalent to your pensionable pay (if in service) or pension (if you’re in receipt of pension benefits) at the time of your death
• It’s paid for between three and six months from the day after your death
• Your children may also be paid a short-term pension
• Long term pension benefits will then be paid by us
After you die, we’ll make sure your family is protected while we sort out your pension benefits. This will be in the form of a short term pension.
Family Benefits
The following people will
automatically receive your benefits
• Spouses
• Registered Civil Partners
• Nominated Partners
• Children (subject to certain criteria) If none of the above is applicable,
then you can nominate the following to receive benefits after you die:
• An unmarried or widowed parent
• A step parent
• An unmarried brother or sister
Whereas Death Grants can be paid to any nominated person(s), Family Benefits can be paid to the following:
For children to be eligible to receive a pension, they must meet the following criteria:
Childrens’ Pensions
• Unmarried
• Natural, adopted or financially dependant unadopted child(ren)
• Up to the age of 17
• If over 17, is in full-time education or undergoing full-time training up to the age of 23
• Incapacitated before the age of 17 and continues to be so and provided they are not fully maintained by the state
When things
change
Changing jobs? Remarrying? Having kids?
For example;
• If you leave work to have a baby, your contributions will continue, but if you
decide not to come back to work, or work part time, this will affect your
benefits.
• If you remarry, you’ll need to tell us too. It affects the way any pension benefits are paid when you die.
If anything else in your life changes, please let us know.
If anything changes...
Tell us!
We can’t stress enough how life changes will affect your pension
If you’re a part-time teacher, you are treated in the same way as a full-time member.
Working part time?
You accrue reckonable service (proportionately) to be used in the calculation of benefits.
In all calculations, we use the full-time equivalent salary.
All your periods of reckonable service, both full and part- time, are added together when calculating any benefits.
Once again, there are variations for individual
circumstances, so make sure you read your member guide.
Let’s work through an example
Sue started her career as a full-time
teacher and worked continuously for ten years.
She then worked on a part-time basis (on a 50% contract) while bringing up her
family for the next ten years, before returning to work full-time for the final ten years of her career.
This means that her pensionable service is 30 years; but we’d calculate that her reckonable service amounts to 25 years.
Planning for retirement
It’s never too early to start planning for your retirement.
Planning for retirement
Check your monthly
payslip – this will tell you how much you’re paying into your pension each month.
It’s so important that you check your Annual Benefit Statement every year and highlight any errors. It’s easier to correct at this stage than in 30 years time.
Throughout your career, tell us when things change. We’re not being awkward, it’s to make sure you get the pension you ‘re
entitled to.
There are several different retirement options, including:
Planning for retirement
Don’t forget, you can use the calculators on our website to help you with
your retirement plans.
Age retirement: want to retire at your NPA and enjoy your full pension?
Age retirement could be for you.
Actuarially adjusted: if you want to leave teaching early and start
to claim your pension – you can from the age
of 55, but you will receive an adjusted pension because you
take it before your normal pension age.
Phased retirement:
subject to certain criteria.
Premature retirement:
granted on grounds of redundancy or efficiency at the discretion of your
employer.
Ill health retirement:
payable before normal pension age, if it’s decided that you’re unfit to teach.
Want to combine your pension with flexible working arrangements?
A little bit more on phased retirement
Your employer(s) will need to agree the change in working
patterns but this could be a great option for you to work flexibly in the last few years of your career.
You have the option to access your
pension benefits from age 55
without giving up work completely.
Phased retirement is available if you want to work in a reduced capacity (either full or part time) but supplement your earnings by claiming a proportion of your pension.
You can claim up to 75% of your pension on two separate occasions.
There are a few T&Cs, the main one being that your salary will need to reduce by at least 20% for at least 12 months to be eligible.
If you’re ill, you may have to stop working even if you haven’t reached retirement age.
Ill health benefits
Ill health benefits come in two different types:
Can’t teach and can’t ever work again?
If you’ve been assessed as being both totally unable to teach or take up gainful employment, you’d be eligible for enhanced benefits, known as Total Incapacity Benefits (TIB). These are paid in addition to your accrued benefits (AB), providing you are still in service or within six months of leaving.
Can’t teach but can work?
If you’ve been assessed as being permanently unable to teach but can do other work you’d be eligible for certain benefits which are based on your accrued reckonable service.
You’ll need to work closely with your employer and their Occupational Health Advisors to make your application. The final decision is made by us, taking into account evidence from Medical Advisors and other factors.
Because you can retire from age 55, we don’t automatically send you a retirement application when you reach your NPA. You’ll need to tell us when you want to retire.
Planning for retirement
• We recommend that you start the application process three to four months before your retirement date. You can do this online for Age or AAB
applications, or download the forms from the website
• If you have more than one employer , your retirement date must be agreed by all of them. An application form must be completed by each of your employers
• Your lump sum (if applicable) is paid on the first working day of your retirement
• You get monthly pension payments, which are paid the day before your birth date. If you were born on the 7th, your pension will be paid on the 6th of each month
It can take up to three months to process an application, especially at peak times so please take this into consideration when planning for your retirement.
Decided you miss teaching?
You have the flexibility to go back to work after you retire.
Your new employment could add to your pension, as you can
keep adding to your benefits
until you’re aged 75 or you have a maximum of 45 years service.
Additional Service After Retirement (ASAR)
If your ASAR is pensionable, you’ll get further retirement benefits on application. These will be based on your extra reckonable service and new salary rates.
Reemployment and abatement
If you return to teaching, the combined income of your
pension and salary must not
exceed your income before you retired. If it does, your
pension will be abated and any overpayments will be
recovered.
To ensure this doesn’t happen, you should send us a re-
employment certificate as soon as you return to work, and for every tax year you remain in employment following your retirement.
Why do I need to let you know if I go back to work?
And finally
Please remember...
It’s your pension. It’s your financial provision in your retirement.
Treat it as a priority, it’ll be worth it.
When you need us, we’re here. Our website contains all you need to know about the Teachers’ Pensions Scheme, and if you can’t find what you’re looking for, our lovely contact centre team can answer any questions.
We’re not Financial Advisors – we know our stuff, but we can’t give you financial advice – speak to
someone who can before making any decisions.
!
!
!
Any questions?
Our contact details
Visit us at:
www.teacherspensions.co.uk Call us on:
08456 066 166
Monday–Friday, 8.30am–6pm Write to us at:
Teachers’ Pensions Mowden Hall
Darlington, DL3 9EE
