teachers pensions

homerhotspur

My wife retired at 60 and, belatedly, discovered that her pension was being split into 3 tranches- final salary 80th based ( payable at 60), Final salary 60th based( payable at 65) and career average based ( payable around 67). She can take the latter 2 now and accept an actuarial reduction for early payment and can elect to have some converted to a lump sum. One of the things which I can't seem to ascertain is whether the 2 later tranches will be uprated by CPI each year until payment or whether this only applies to a deferred pension situation ie if she waited until 70 to take them?

OldBeanz

homerhotspur said:

My wife retired at 60 and, belatedly, discovered that her pension was being split into 3 tranches- final salary 80th based ( payable at 60), Final salary 60th based( payable at 65) and career average based ( payable around 67). She can take the latter 2 now and accept an actuarial reduction for early payment and can elect to have some converted to a lump sum. One of the things which I can't seem to ascertain is whether the 2 later tranches will be uprated by CPI each year until payment or whether this only applies to a deferred pension situation ie if she waited until 70 to take them?

Not an expert in the TPS by any means but most HMG pensions do not benefit overall from deferring them past normal pension age. TPS pensions increase by CPI +1.5%. On leaving, if any absence is less than 5 years (allows for pregnancy, working abroad for a few years and early retirement) then that is maintained otherwise it then drops back to CPI (I believe none of the previous 5 years' extra 1.5% is added but not sure about that). So the optimum time for your wife to draw her pension may well be at 60 then for the other 2 tranches 60 + 5 years less one day. That's the area I would be looking at - given the amount of information you have supplied. Converting HMG pensions to lump sums is not normally beneficial unless there is for example a medical reason, with rates well below commercial rates. Hope this helps.

zagubov

Not an expert either but could you please specify which of the three UK systems your wife was in (E&W, NI or Scotland) as I think they're all different.
Mostly converting pension into or from lump sums in Teachers Pensions isn't smart, and delaying payments isn't always worthwhile.

cobson

There is a deferred member guide on this page that might be of help:

https://www.teacherspensions.co.uk/members/resources/guides.aspx

On page 5 it mentions that benefits in the career average scheme continue to be index linked at a lower rate (i.e. CPI) than when in service (CPI + 1.6%).

Note that as your wife has retained benefits in the career average scheme but will no longer be paying into it then she fits the definition of a deferred member as given on page 3.