Teachers Pension Planning

If you have retired early or phased your retirement then you can return to teaching and your new salary will not affect your pension benefits. If you return to teaching on or after your normal pension age, then there is a limit as to how much you can earn before it will impact on your pension.

In short, your pension plus your new salary must not exceed the final salary that was used to calculate your pension. If the combined figure exceeds this, then your pension will be reduced by the equivalent amount.

If you know that you're a member that has or will transition to the new CARE arrangements, you will build up benefits based on 1/57th of your actual salary each year from the date of transition. This will also be index linked. It will mean that you'll have benefits in both the career average and final salary arrangements and therefore will have more than one NPA. Your NPA for your final salary is 60 (if your entered service pre 2007) or 65 (if you entered service post Jan 2007).

Your NPA for your career average benefits is either your State Pension age or age 65, whichever is the later date. When you retire TPS will use your salaries earned in career average to calculate your final salary benefits. This is called the final salary link. However, check with TPS if you have had a break in service.

Only service before 1 January 2007 entitles you to an automatic lump sum when you take benefits.

If you only have final salary service after that date, or have any career average service, you’ll not receive an automatic lump sum when you take your benefits. However, you can choose to give up part of your pension to receive a lump sum. Your pension will be reduced and you must make your decision when completing your application form.

For each £1 of pension that you give up you’ll receive £12 of lump sum. The maximum amount of lump sum that you can receive is 25% of the total value of your benefits. To work out the maximum additional lump sum for the 80th scheme use the following calculation:

Annual Pension multiplied by 33, and divided by 14

When in payment, your pension is reviewed each year in line with the cost of living. Once retired, you will be informed of that figure each year.

This depends on your individual circumstances and marital status.

• If you're a married male teacher married to a female, all service for 1 April 1972 counts towards family pension benefits.
• If you're a married female teacher, only service from 6 April 1988 counts towards family pension benefits. Similarly, if you're civil partnered, service from 6 April 1988 counts towards your family pension benefits.
• If you're neither married or in a civil partnership, your nominated partner may receive benefits calculated from service from 1 January 2007 only. You will need to complete a nomination form.

The Teachers’ Pension Scheme provides a number of flexibilities for you to top up your benefits. You can buy Additional Pension Benefits (APB). You can buy APB's in multiples of £250 up to a total maximum in the Scheme. The maximum amount of APB that can be purchased in the Teachers' Pension Scheme by a member or employer is reviewed annually. You can pay monthly from your pay packet or pay with a one off lump sum. Ask for a quote from the Teachers’ Pension Service.

You could also consider Teachers’ Additional Voluntary Contributions (TAVC’s). This is provided by the Prudential. This is a defined contribution scheme and therefore your pension is not guaranteed. The amount of pension benefits will be dependent on the amount you have paid into your policy and the performance of the investments.

Members who have or will join the Career Average Scheme (CARE) will be subject to different arrangements. See 'How will the transfer to CARE scheme affect my normal pension age?' FAQ for more information.

There are different rules for returning to the classroom depending upon whether you retired at your normal pension age or have taken early retirement. In all cases you must complete a return to teaching form available from the TPS website.

If you want to transfer your pension rights out of the Scheme, You will need to complete an application form from the Teachers Pension Service (TPS) website.

Please be aware that from 6 April 2015, the Teachers Pension Scheme are unable to transfer your benefits to a Defined Contribution scheme, they can only transfer to Defined Benefit schemes.

Defined Benefit schemes guarantee to give you a certain amount each year when you retire usually based on your salary and years of service. TPS is a defined benefit scheme. Defined Contribution schemes are where money is invested in selected funds and your pension depends on how much has been paid in, how long you’ve been paying in and how well the investment has performed.

In either case, you become a 'deferred member'. This means that your accrued service will remain in the Scheme for you to claim as pension benefits when you reach your Normal Pension Age (NPA) or earlier. The benefits are index linked from the day you opt out.

If you check your statement online, you’ll be able to see year on year how the value of your pension is increasing. As a deferred member, you will not be able to make further contributions to the scheme

If you transition to the new CARE scheme, the flexibilities available are:

• Faster Accrual rates -1/45th, 1/50th or 1/55th: This means you can build up pension at a different rate to the standard 1/57th accrual rate therefore building up more pension benefits
• Buy Out: This enables you to offset the impact of taking early retirement if you have transitioned to CARE. If your new NPA is 66 you’ll be able to Buy Out one year’s actuarial adjustment, whereas if your new NPA is 67 you’ll be able to Buy Out two years and if your NPA is 68 you’ll be able to Buy Out three years actuarial adjustment. ‘Buy Out’ must be done within six months of transitioning to the CARE scheme.

If you were in receipt of Statutory Maternity Pay your contributions would have continued. Your pensionable employment will be considered to have stopped at the end of your Statutory Maternity Pay (SMP) or once you’ve stopped receiving any pay.

In this case you are called a teacher with mixed service, your pension statement will give you a breakdown of the benefits accrued under each scheme as follows.

If you accrued pension benefits after 1 January 2007 you’ll have an NPA of 65 and your pension for this period of time will use the following calculation:

Service years is 60 multiplied by final salary

If you became a member before 1 January 2007 your NPA for any final salary benefits will be 60 and the benefits for this period of service will be calculated as follows:

Service years is 80 multiplied by final salary

Both figures are then added together to give your gross pension per annum figure.