Teacher pension: transfer or not?

EmmsySquared

Good evening

I'm hoping someone will be able to offer me some pension advice. I am getting mixed opinions from people. I am also getting incredibly confused with the jargon and have reached a point of frustration! 

I am a teacher who has moved from England to Scotland. I have to decide soon whether to transfer my pension or start a new one and have two.

I taught (without breaks) in England for just over 14 years. 

My English pension (currently deferred) statement states that I have:

Final salary 80th scheme: 10 yrs, 212 days. £6189 per anum (from age 60) plus the lump sum.

Career average: £3555 (from age 68)

My transfer offer is:

Final salary 60th scheme: 11 yrs, 209 days. No sum quoted, but retirement age 65.

2015 Scheme: £3495 per annum.

I am late 30s. I've done the whole leadership business, and have moved to Scotland for a quieter life. I don't plan on ever applying for promotion again, and I plan on remaining just a teacher. As the move to Scotland was all about a change in lifestyle, I may even go to 4 days a week in a couple of years. Maybe 3 if finances allow! I took just over 4 months off between the English and Scottish job.

I realise this is a big ask, but if anyone could offer advice I would be incredibly grateful. Based on what I've read and been told, starting a new second pension seems to be the best course of action for me. But I'm all at sea with this and anxious I'll get it wrong.

Thanks for reading and any advice you can offer! 

Brynsam

What was your leaving salary and what is your new current salary?

xylophone

Final salary 80th scheme: 10 yrs, 212 days. £6189 per anum (from age 60) plus the lump sum.

£6189 per anum (from age 60) - ahem, I think you mean per annum...  

More seriously, how useful is it to you to be able to draw this pension without actuarial reduction at age 60?

EmmsySquared

Hello and thanks so much for the responses.

I certainly did mean per annum! £6189 per anum is quite a thought! 😕

The final salary part of my English pension is based on a salary of just over £46k. My current is just over £40k.

There is no way in hell I'm staying in teaching until I'm 65! 60 seems rather a push as it is.

Thanks for all help! 

hyubh

EmmsySquared said:

My English pension (currently deferred) statement states that I have:

Final salary 80th scheme: 10 yrs, 212 days. £6189 per anum (from age 60) plus the lump sum.

Career average: £3555 (from age 68)

My transfer offer is:

Final salary 60th scheme: 11 yrs, 209 days. No sum quoted, but retirement age 65.

1/80ths pension + 3/80s lump sum was traditionally considered actuarially equivalent to 1/60th pension and no lump sum. So, very broadly speaking, the just under a year extra reckonable service reflects the higher NPA. However, the key variable here is your whole-time equivalent pay in your new job, and what it will likely be come retirement vs. the final pay used to calculate your deferred benefits in the TPS. The pay your deferred pension is based on is fixed (i.e. the 80ths is now academic), it will just revalue by CPI if left separate; whereas, your future pay is now all-important on what the 60ths is a 60ths of.

2015 Scheme: £3495 per annum.

The original CARE pension would revalue at CPI if left deferred, the transferred earned pension credit CPI+1.6% while you remained an active member of the STPS. So, while there is a small drop for that tranche at the outset, it would quickly be made up (and more) were you to transfer.

I am late 30s. I've done the whole leadership business, and have moved to Scotland for a quieter life. I don't plan on ever applying for promotion again, and I plan on remaining just a teacher. As the move to Scotland was all about a change in lifestyle, I may even go to 4 days a week in a couple of years.

Future hours are irrelevant, future rate of pay a different matter.

EmmsySquared

Thanks hyubh very much for your input. 

I hope to retire at 60 at the latest. If my plans come to fruition and I get to go part time, I can't see me earning close to £46k in my last 10 years.

I totally understand what you're saying about the 1.6% on the career average scheme. I wonder however if the money I'd lose by not transferring it (especially since it's a relatively small sum) would be a good trade off for keeping the final salary part of my English pension, plus the earlier retirement age. 

LHW99

Could you transfer the CA part, and leave the English DB as is? You would keep the 60 NPA on the English DB, and reduce the NPA on the remainder to 65 if its possible to do.

EmmsySquared

LHW99 said:

Could you transfer the CA part, and leave the English DB as is? You would keep the 60 NPA on the English DB, and reduce the NPA on the remainder to 65 if its possible to do.

I don't think so. I think it's all or nothing. 

zagubov

EmmsySquared said:

LHW99 said:

Could you transfer the CA part, and leave the English DB as is? You would keep the 60 NPA on the English DB, and reduce the NPA on the remainder to 65 if its possible to do.

I don't think so. I think it's all or nothing. 

If I were you I'd check on this. Your new teaching union may have information as your situation is a bit of a niche problem. For instance if you collect your TPS pension while back in England you could have it abated to stay within your Salary of reference if you then stayed in employment eligible for the TPS. However you might not be if you're only eligible for the different pension north of the Tweed.

I don't know how much they coordinate. You should contact your new union, your new pension agency, your old pension agency, and also the forums of the educational press. When contacting  them, especially the pension agencies, be sure to ask yes-no questions., as they can't do either lightning calculations or offer advice about what's better.

They can say whether your English FS pension is subject to abatement if you collect it at 60 while still working in a different jurisdiction with a different pension administration system. I'm in the English TPS and on other threads I've read about people being partially on FS and later CA systems; there seem to be some options to take them separately in some UK jurisdictions. This gives the advantage of having the pension while earning part-time.

If you do decide to keep the TPS separate from your Scottish pension, you may also want to ask what would happen if you collected it even a day before your birthday, rather than the day you turn 60. 

Some of this is time-sensitive- I think you only get 12 months to decide to transfer, so please don't delay finding out as much info as possible. Good luck.

Sonatine

Hi, another conundrum for you is the upcoming McCloud adjustment (check 'news' on tps website), whatever form it takes. This might (though no one knows for sure yet) involve turning your career average back into 1/80ths if you wanted, so would enable you to park more of your accrued pension in the part you can claim at 60. If you transferred to the 60th scheme, that can be called in at 65, so how McCloud would play if you transferred I simply don't know. I think with your aim to retire early, staying in TPS may be best, but I don't envy your decision here as you don't have all the available information to make a fully informed decision. good luck.

GunJack

Sonatine said:

Hi, another conundrum for you is the upcoming McCloud adjustment (check 'news' on tps website), whatever form it takes. This might (though no one knows for sure yet) involve turning your career average back into 1/80ths if you wanted, so would enable you to park more of your accrued pension in the part you can claim at 60. If you transferred to the 60th scheme, that can be called in at 65, so how McCloud would play if you transferred I simply don't know. I think with your aim to retire early, staying in TPS may be best, but I don't envy your decision here as you don't have all the available information to make a fully informed decision. good luck.

This could be a very important point if you're sure you want to go at 60 (or even a couple of years before with the actuarial reduction).....gather as much info ahead of this as possible as others have advised.