Teachers pension

johntudor70

Hi, I will be 61 years old in September and have been teaching for 13 years. I still work full time. I am a member of the original pension scheme. I could have taken my pension when I reached 60. I do not plan to retire yet. Should I take my pension and stop paying in, or should I keep paying in and take it when I finish?

JoeCrystal

Personally, in my opinion, you would be better off waiting until you finish work as you will have the benefit of building up more pension. Otherwise, you may find yourself paying income taxes on the pension income if you are still earning a salary.

xylophone

Otherwise, you may find yourself paying income taxes on the pension income if you are still earning a salary.

He could be paying tax on his pension income regardless of whether or not he is earning a salary.

Dox

What are your objectives?

JoeCrystal

xylophone wrote: »

He could be paying tax on his pension income regardless of whether or not he is earning a salary.

That is true. I meant that he could be paying more income taxes as he would not be able to take advantage of Personal Allowance as it is used up by his employment.

hugheskevi

What happens to the pension you are entitled to but are not drawing?

Is the pension actuarially enhanced when you claim it to reflect the pension not drawn, do you receive arrears, or do you simply lose the pension not drawn?

Sobraon

OP I urge you to talk to TPS by phone and discuss the possibilities.

However, as I understand it if you don't draw your pension from 60 you just lose it (no enhancement for later retirement), but you do continue to accrue service in the old scheme if you don't stop teaching.

Because of the less than inflation adjustment in pay over the last 13/14 years it is possible that your reference salary for pension is based on an earlier three year period (not last year of service). TPS can tell you the figure for this reference salary.

If you draw your pension and continue to teach then your pension + your current pay must be less than the reference salary ( if not they 'abate' - i.e. stop the pension payment). This is likely to mean going part time. Also, if you draw you pension and want to continue you have to have a break in service AND you can't stay in the old pension scheme . Future pension is in the new scheme.

This is my understanding of the situation but again please do ring TPS.

zagubov

Just echoing hugh and Sob's posts
Lots of food for thought.

If you visit the TP website, emails don't get speedy replies, and the website is a bit of a maze. When exploring it, take lots of screenshots to print out later.

Phoning's usually better and faster, but be aware they can's suggest plans of action (as that would be advice) but they can talk about their consequences, so line up questions like if I do this will I then be allowed to do that?

They are very helpful but they're not supposed to be proactive and push ideas on you.

Don't expect them to be able to quote precise figures about your individual pension over the phone either- they take ages for them to work out.

You may want to ask them whether unclaimed pension after your Normal Pension Age of 60 is lost or is eventually returned to you via actuarial enhancement or as arrears.

Is it the case that you are still accumulating future benefits the longer you work past this age, and the index-linking is increasing these future benefits.

Ask how can you check if you best salary years will fall off the end if you delay retirement too long.

How can you find your Final Reference Salary? If you continue to work you must not earn more than this via your teaching salary plus teachers pension. It will be clawed back and HMRC may give you a severe financial kicking. Do check up on this.

Would your employer consider offering you phased retirement? This might be a good way of retiring gradually. This allows you to decrease work by at least 20%, twice, before you completely retire. You can claim up to 75% of your pension each time, as long as you don't go above the FRS. You could ask if there's an age limit for starting and finishing this process.

You may want to think about how this reduces your death in service benefits if you're using the pension for life insurance purposes to protect mortgage/family.

You'll be automatically offered a lump sum, plus the chance to sacrifice future pension income to enhance it. Once you decide on this, it is irreversible and can't be changed. The conversion rate isn't generous -each £1 you lose from your pension gives you £12 lump sum, but you're likely to live for up to 30 years after pension age, instead of just 12.

I don't think you can continue full-time in Teachers pensionable employment full-time and receive a full pension. There is a loophole where you can do that but you need to take an actuarially reduced pension instead of a full one ( i.e. you must have retired for at least a day before your NPA ). Sorry abut that - it's absolutely nobody's job to tell you about that.

You can still retire, get a full pension and work full-time outside education, and of course get taxed at the higher rate.

Be aware there may be slight differences if you're in Scotland/NI.

zagubov

It looks as though there may be an uplift if you take your Teachers Pension later and you're on FS.
This page has links to some useful documents:
https://www.teacherspensions.co.uk/members/resources/factors.aspx

zagubov

Okay there's a more recent thread relevant to this.