Confused by Teachers Pension scheme

ouraggie

Hi. I was a deferred member of the TPS. Left teaching in 2003 with 17 years service. I was in line for a nice lump sum of £29k when I hit 60 next year, and an annual pension of £9.7k. 

In March I was given a zero hours supply teaching contract by the school where i do exam invigilation. They have auto-(re)enrolled me into the TPS and the other day i discovered my lump sum has dropped to £18k and the pension to £6k. When i enquired why at TPS i was told it is because of my recent “service”, which the new school has been adding to my service history every month. I have only done two days in about 4 months. They said the CPI increases do not apply on my previously-accrued service now. am really confused by all this. Should i opt out? I imagine I am likely to work for just a few days every year. All clarification gratefully received. Nothing on their website seems to cover this one!

xylophone

I saw this on the North Yorks TPS (and I imagine it applies wherever you teach)

The teachers' pension scheme changed in April 2015 with different member types; some remain in final salary only, some have a pension in both final salary and career average whilst new members will have career average only. Deferred members and pensioners also need to be aware of changes, in particular for if they decide to return to teaching. If individuals are unsure which member type they are and how the scheme applies to them then further information is available on the Teachers' Pensions website.

If there is nothing relevant on the website, I think that you will need to write to the Administrator asking for an explanation of your situation.

kpk2000

Search for David Fountain on YouTube and send him a message as this is his area of expertise. I suspect your original service will be linked to your original service final salary as you had a 5 year gap in between service periods but the TPS statements cannot show this as multiple calculations are done on retirement. Dave is the best expert I’ve found on the TPS so check him out and message him.

Sun-Is-Fun

Don't worry ! You won't lose out and will get your original higher pension figure, which will have inflation added from when you left in 2003 until when you claim your pension. Because you were deferred until March, when you come to claim your pension, you will have what is called a hypothetical calculation done, as you had a break in service from the scheme. This compares your higher average salary from 2003 to your average salary now and gives the best of both worlds, which in your case will be your higher pension amount, not the lower one. Unfortunately, this is not shown on your teacher's pension statement if you log in to view, as it only shows the best average salary you had in the last 10 years, hence why it will be showing you a less pension now. The TPS advisor really should have told you this. As others have said, look at Dave Fountain's videos on youtube - the one entitled  'Pension - Don't throw £000's away' is about the hypothetical calculation. I would also advise you to watch all his other videos. You can look at the hypothetical calculations information and examples (albeit the examples are a bit hard to follow) on the TPS website, but Dave Fountain's explanations are better. 

You can contact Dave Fountain if you want further reassurance. He is great at answering queries. 

You do not need to opt out again as you had a big 'opt out' from 2003 to March this year and you are now accruing benefits in the career average scheme from April, so these will go towards your pension as well when you decide to claim it.

ouraggie

Thank you so much, the 3 of you. That is very helpful. I will seek out David Fountain as suggested. Sounds like he’s my man!

diddyflanker

ouraggie said:

Hi. I was a deferred member of the TPS. Left teaching in 2003 with 17 years service. I was in line for a nice lump sum of £29k when I hit 60 next year, and an annual pension of £9.7k. 

In March I was given a zero hours supply teaching contract by the school where i do exam invigilation. They have auto-(re)enrolled me into the TPS and the other day i discovered my lump sum has dropped to £18k and the pension to £6k. When i enquired why at TPS i was told it is because of my recent “service”, which the new school has been adding to my service history every month. I have only done two days in about 4 months. They said the CPI increases do not apply on my previously-accrued service now. am really confused by all this. Should i opt out? I imagine I am likely to work for just a few days every year. All clarification gratefully received. Nothing on their website seems to cover this one!

I've seen your message to me and have responded but it's worth posting here as well for others.

There are several rules around the area of leaving and returning to the scheme.
HYPOTHETICAL CALCULATION RULE
The one I think you will benefit from is called the "hypothetical calculation".
https://www.teacherspensions.co.uk/-/media/documents/member/factsheets/applying-for-retirement/hypothetical-calculations-v1-april-2019.ashx

In brief, it protects the final salary pension at the point in time that you took the break, if the FS pension you had at that time turns out to be worth more than the one you have at the end then you get the higher one.

Annoyingly, and in my opinion counter to the legislation that requires scheme providers to give you data about the value of the pension you have in their scheme , TPS refuse to include the amount of pension that would result from such breaks and as a result your pension - as you have seen - can appear to take a massive hit.

5-YEAR DISQUALIFYING BREAK RULE
This rule could also apply if you have a break of more than 5 years from the scheme. In this case the pensions from before and after the break are treated as being separate and independent from each other. However, I think this rule didn't come in until 2012 and so may not have been applied as you were not part of the scheme in that period.

Fermion

My wife was in a similar situation with her Teachers Pension approaching retirement and the hypothetical calculation was checked in her situation. You can create a spreadsheet to check the calculation yourself in the various scenarios.

In Scenario 1 - your full-time equivalent salary for any temp work does not rise above you original average salary then the hypothetical calculation would apply. In that case your pension is based on your original number of years service multiplied by your original average salary uplifted by cumulative CPI(I think, used to be RPI) for the years since you left employment.

In Scenario 2 - your full-time equivalent salary for any temp work does rise above you original average salary, than you can check that the new total years service and new average salary isn't more than the hypothetical calculation in which case you can use that that  figure.

 In my wife's case she had a senior position then had about 4 years break in service but then returned to work on various main scale posts for a few year before taking a senior post for the final few years. So although they did the hypothetical calculation it was more advantageous to use her final pre-retirement average salary and multiply by the total number of years service.

TPS produce a booklet that you can use to create a spreadsheet 

Sun-Is-Fun

Fermion said:

TPS produce a booklet that you can use to create a spreadsheet 

Any idea where this can be found as cannot see it on the TPS website? Thank you.