Teacher pension - confused

countrygirl27

This is probably a silly question....

I thought the teachers pension scheme was a final salary scheme. My understanding of final salary schemes is that you get a percentage of your last years work salary. (ie, its better as you are likely to finish at the top of your earnings power.)

But....

On the TPS website it says that the pension is worked out as 1/60 x AVERAGE salary x years service.
Surely this is not a final salary thing its an average thing?

Am confuddled! I have looked on other threads but cant seem to find the answer, or I may have seen the answer and not known it cos I dont know what Im talking about.

CAE

FAQs are on the Tachers Pensions website, try ths link

http://www.teacherspensions.co.uk/faqs/eorb_faqs.htm#FAQ

Here is an extract concerning Average salary.You wil note that where pensions are concerned there are no easy answers!

Q. What is average salary?

A. This is the salary used to calculate your benefits when you retire.

Q. Is it always calculated in the same way?

No, it depends on when you retire.
If you are out of service and your last service was before 1 January 2007, then only one calculation is necessary.
If you are retiring on or before 31 December 2008, then it is the best of three different calculations.
If you joined the scheme after 1 January 2007 or are retiring after 31 December 2008, then it is the better of two different calculations.

Q. What method is used if I left service before 1 January 2007?

The highest amount of full salary for any consecutive 365 days of reckonable service, whether continuous or not, during the last three years of reckonable service.
Reckonable service is those years and days that count towards your pension benefits.

Q. What method is used if I was in service before 1 January 2007 but retire before 31 December 2008?
A. The best of the following calculations will be used.
The highest amount of full salary for any consecutive 365 days of reckonable service, whether continuous or not, during the last three years of reckonable service.
The salaries for the last ten calendar years are increased using the Retail Prices Index (RPI). Then the average of the best consecutive three years’ re-valued salaries in those ten calendar years is used.
The average salary over the last 365 pensionable days before the date of retirement.
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Q. What method is used if I retire after 31 December 2008?

A. The better of the following calculations will be used.
The salaries for the last ten calendar years are increased to current day value using the RPI. The average of the best consecutive three years re-valued salaries in those ten calendar years is used.
The average salary over the last 365 pensionable days before the date of retirement.


Q. Are there circumstances when the average salary may not be calculated as above?

A. There are circumstances where this may not be the case, for example where you have had a significant increase in salary during the period. For more information you should contact your employer or click here.

countrygirl27

so what would happen if say you stopped working as a teacher at 45, but wanted to start drawing the pension at 65? Would they calculate it from the average of the best 3 years in the working age years 35-45?

Debt_Free_Chick

countrygirl27 wrote: »

so what would happen if say you stopped working as a teacher at 45, but wanted to start drawing the pension at 65? Would they calculate it from the average of the best 3 years in the working age years 35-45?

Yes - but then index link the resulting pension up to retirement age.

The pension is "pretty near" final salary, but not based on actual salary in the year before retirement. Close, though