Effects on TPS Pension when moving to part time

Seekingsavings21

Could I ask a rather simple question? If I am in the Teacher's Pension Scheme (stretching across the final salary and career average time periods) and have generated a pension on a higher salary, what are the consequences of stepping down to a less well paid position (still in the TPS) while also moving to part time? I have years of work left in front of me, so are my pension contributions to date locked in, or will I suffer from a career average calculation that becomes based on a reducing average salary?

Dazed_and_C0nfused

Final salary = likely significant reduction because your final salary will be at a lower grade.  Being part time wouldn't have any impact.

CARE = no impact, you will get a proportion of your career (whilst on that part of the scheme) earnings.  Part of that career will be at a lower grade and part time so instead of accruing say £700/year it might only be £300/year.  But it is still the same proportion of your earnings, you've just chosen to earn less.

NB.  Your pension contributions really have no relevance whatsoever.  Final salary and CARE schemes are a promise to pay £x from NPA for the rest of your life.  Whether the contribution was 5% or 15% doesn't alter that.

You should really have a good read of the scheme guides.

Fermion

If you are on the final salary scheme then take a position at a lower grade, then it depends if you have had a break in service before the move. If there was, then the TPS use a hypothetical calculation to ensure that pensioners are not disadvantaged. see https://www.teacherspensions.co.uk/-/media/documents/member/factsheets/applying-for-retirement/hypothetical-calculations-v1-april-2019.ashx?

mark55man

I understood that in TPS you take the best 3 years from the last 10.  Which is the 3 years that give you the highest pension income, which because of the difference between pay rises and inflation rises reasons, is not always the same as your 3 highest salary years.

So if your "years" left to work would take your current higher pay out of the 10 year window then you would be worse off (that's if you are currently a Final Salary Scheme).  If you are currently Care then the new lower years would just contribute less but you wouldn't lose any of the higher amounts already earned.

One option may be to leave a DB scheme (but not your job) and then rejoin a CARE later - leaving would "cement" your higher pension, and then joining again would add you to a newer scheme (still good) - but the scheme's aren't equal so you would have to be careful to do the maths - ie it might be better to take the loss of your higher years to stay in the original scheme - especially if there is any chance of you returning to a higher paid role for 3 years before retirement.

Not a TPS expert, but done enough research for friends and siblings to know its a good scheme and the website is pretty helpful   

marlot

Your union probably has a TPS expert on the team.  I'd see if you can book 30 minutes with them.

zagubov

Are you using the pension as life insurance for your mortgage, as many teachers do?
You may need to check if this changes when you go part-time. The TPS website can be helpful but as (like most posters here) they're not financial advisors they can't offer advice, nor can they talk confidently about your precise pension values.
You need to ask questions like: if I  switch from full-time to part-time but die in one/two/etc. years after the transition, does my pension payout three times my full salary or my part-time salary?
and so on.

hyubh

zagubov said:

Are you using the pension as life insurance for your mortgage, as many teachers do?
You may need to check if this changes when you go part-time. The TPS website can be helpful but as (like most posters here) they're not financial advisors they can't offer advice, nor can they talk confidently about your precise pension values.
You need to ask questions like: if I  switch from full-time to part-time but die in one/two/etc. years after the transition, does my pension payout three times my full salary or my part-time salary?

How much is the in-service death grant?

If you’re in the career average arrangement it’s three times your annual rate of pensionable earnings when you die or leave service (if applicable), but if you’re employed on a part-time or irregular basis this is assessed as if you were full-time. If you’re in the final salary arrangement it’s three times the average salary which would be used to calculate your own benefits, this is based on full-time equivalent pensionable salaries.

https://www.teacherspensions.co.uk/members/faqs/bereavement-and-family-benefits/family-benefits.aspx

zagubov

Even for a while after you retire, your dependant is entitled to a discretionary death grant.
https://www.teacherspensions.co.uk/members/once-retired/death-benefits.aspx#:~:text=If you're a pensioner,a "supplementary death grant".