Teachers pension question

eastcorkram

Sorry for possible dumb question! Partner is playing with calculator on teacher pension site. She is still in the scheme, aged 53, and been in for about 12 years so far.
It shows a lump sum and a pension, depending on what age you enter that you want to retire. It then gives an option of reducing pension to increase lump sum. Is the opposite not possible? Even when you set the slider to zero lump sum, it still shows results as a lump sum and pension.

Is the lump sum compulsory?? Thanks.

xylophone

https://www.teacherspensions.co.uk/members/faqs/new-and-working-years/converting-pension-to-a-lump-sum.aspx

Is she entitled to an automatic lump sum?

PensionTech

Not a dumb question at all. It sounds like she has an automatic lump sum (as xylophone suggests). As you have found, it is possible to receive a higher lump sum if she gives up some of her pension. Some schemes also allow members to give up automatic lump sums for a higher pension (this is called inverse commutation), but it seems to me that the TPS is not one of them. I have not found anything definitive confirming that, but all of the information on their website suggests that they only allow commutation of pension to lump sum and not the other way around. I have also found this factor table which implies that inverse commutation is only applied in some circumstances where the member's lump sum cannot be paid because of restrictions in the scheme rules or overriding legislation - rather than as a voluntary option available to members.

So in short, yes, it seems like the lump sum is compulsory - although you can always write to TPS to make absolutely sure. But that's no bad thing - it's tax-free.

eastcorkram

xylophone wrote: »

https://www.teacherspensions.co.uk/members/faqs/new-and-working-years/converting-pension-to-a-lump-sum.aspx

Is she entitled to an automatic lump sum?

Yes. She is wanting to know if you can take zero sum and instead, have a larger pension.

LHW99

Does her service cover a change in the TPS terms?
I left over 15 years ago, so get an automatic lump sum, and no conversion options.

The conversion idea came in for later service I think, so perhaps she has some under both types of scheme?

jem16

eastcorkram wrote: »

Yes. She is wanting to know if you can take zero sum and instead, have a larger pension.

No she can't as she joined before 2007. The scheme she is in is an 1/80ths scheme with automatic lump sum of 3 times annual pension. After 2007 it became a 1/60ths scheme with no automatic lump sum but those who were on the original scheme stayed on it.

She can take more lump sum but she cannot take less.

xylophone

Yes. She is wanting to know if you can take zero sum and instead, have a larger pension.

Covered in FAQ in link.

jem16

xylophone wrote: »

Covered in FAQ in link.

I don't see it xylophone. Can you show us where?

All the FAQS appear to relate to converting pension to lump sum and not converting lump sum to pension which is what was being asked.

xylophone

All the FAQS appear to relate to converting pension to lump sum and not converting lump sum to pension which is what was being asked.

Sorry, yes, - I had read it as implying that if you had pre 2007 pension then that was the arrangement you had to accept so that you could neither increase nor decrease the automatic lump sum.

jem16

xylophone wrote: »

Sorry, yes, - I had read it as implying that if you had pre 2007 pension then that was the arrangement you had to accept so that you could neither increase nor decrease the automatic lump sum.

As long as you have service after 2007 then you can commute pension to receive more lump sum. However this does also apply to pre 2007 service.

What it really means is that if you only had pre 2007 service then you would only be eligible for the automatic lump sum.

eastcorkram

Many thanks for the replies! It seems then that you have to take the lump sum. As was said, probably no bad thing. Just seemed odd to me with my knowledge limited only to private company pension!