Does anyone understand the teacher pension scheme?

Horlock

So here is my situation.

I've been paying into the scheme for the past 8 years. Then I had 1 school year break. Then I returned to teaching on a much lower salary.

I'm considering leaving the teaching profession but am a little scared about what I've just done to my pension.

Basically in the school year 11-12 I earned £42000
In school year 12-13 I earned zero
In school year 13-14 I should earn £37000

However, I'm aware that school years are different to tax years and I don't know what years the pension is based on.

What scares me is that I believe that the pension is based on the highest salary in the final three years of teaching.

I'm scared that:
1. If I contribute to the scheme next year my final 3 years will be 0, £37000, £37000 hence pension based on final salary of £37000 index linked and ignore the significant number of years at the higher rate.
2. Even worse if the pension is based on tax years I may have already scuppered myself as in tax years 12-13 I earned about £12000, in tax year 13-14 I will earn about £24000 and if I stop teaching this summer then tax year 14-15 U will earn about £11000

It could be that I have nothing to worry about - anyone know who I can ask - as I may need to opt out of the pension scheme asap! Preferably not contributing since last September.

Otherwise anyone know who I can ask?

Thanks

hyubh

Horlock wrote: »

However, I'm aware that school years are different to tax years and I don't know what years the pension is based on.

IIRC the TPS year is 1 April - 31 March. However, that's nothing to do with how pension benefits are calculated - rather, that's the reporting period for employers' annual returns to the TPS (and subsequently, the period that annual benefit statements are based on). For calculating pension benefits you work back from the final day of employment, e.g. if your last day were to be on 31 August 2014 then your final year of membership would be 1 Sept 2013 to 31 Aug 2014.

What scares me is that I believe that the pension is based on the highest salary in the final three years of teaching.

No, it's the higher of the average of the final year and the best three in the final ten (past years are uprated for inflation). Also keep in mind it is always whole time equivalent figures that are used:

https://www.teacherspensions.co.uk/members/the-scheme/active-teacher/doing-the-sums.aspx
http://www.legislation.gov.uk/uksi/2010/990/regulation/37/made

I'm scared that:
1. If I contribute to the scheme next year my final 3 years will be 0,

I would be surprised if a service break isn't just taken out (it would be in, say, the LGPS), but maybe someone else could confirm.

Otherwise anyone know who I can ask?

At the risk of stating the obvious - Teachers' Pensions...

https://www.teacherspensions.co.uk/public/contact-us/member-contact-us.aspx

jem16

hyubh wrote: »

No, it's the higher of the average of the final year and the best three in the final ten (past years are uprated for inflation). Also keep in mind it is always whole time equivalent figures that are used:

Just for clarity as what you've written made it sound like you take the final year and add it to the best three in the final ten and then take the average of that total. I'm assuming you didn't mean it that way though.

It should be;

How is the average salary calculated?


Your average salary is important because it’s used to calculate your final pension.

How is it calculated? It’s whichever is the highest of these:

1. The Pensionable Salary you received in the last 12 months before retirement.

2. The average of the best three consecutive salaries (revalued to take into account inflation) during the 10 years prior to leaving service.

I would be surprised if a service break isn't just taken out (it would be in, say, the LGPS), but maybe someone else could confirm.

FAQ on the TPS website says;

Your final full time equivalent salary averaged out over the last twelve months of service.
An average of your best three revalued year’s salaries of the last ten years of pensionable employment.

As it's pensionable employment that counts, any break in service would be ignored.

The only way a break would be an issue is if you were a member of the pre 2007 scheme with retirement age of 60 and then had a break of 5 years. If you rejoined you would have to rejoin under the post 2007 scheme with a retirement age of 65.

hyubh

jem16 wrote: »

Just for clarity as what you've written made it sound like you take the final year and add it to the best three in the final ten and then take the average of that total. I'm assuming you didn't mean it that way though.

Correct! That said, I did start that bit by saying 'the higher of...'

BobQ

The average of the best three consecutive salaries (revalued to take into account inflation) during the 10 years prior to leaving service.

Does this mean that each salary in the previous 10 years is revalued for inflation and then the average of the best three consecutive values are taken.
OR
The best three consecutive salaries (the values paid) are selected and averaged and that the average is then revalued for inflation.

hyubh

BobQ wrote: »

Does this mean that each salary in the previous 10 years is revalued for inflation and then the average of the best three consecutive values are taken.
OR
The best three consecutive salaries (the values paid) are selected and averaged and that the average is then revalued for inflation.

The former(ish) - click the second link I gave, which is to the relevant part of the TPS Regulations. I say '(ish)' because the best consecutive 1,095 days (which is what we are looking for) need not in principle be the same as 'the three best consecutive [indexed salary] values'...

rpc

Timed carefully, this type of change can work to your favour.

I know a few teachers who have given up their promoted posts, but timed their retirement so that the promoted salary is the one that the pension is calculated on. It gives a few easier years to wind down to retirement.