Teachers Pension Revaluation on Retirement

Organgrinder

Could someone clarify the situation with regard what happens if you retire mid year (ie.at the end of the school year).

I've read somewhere that the pension increase the following year is pro-rata, ie if you retire on Aug 31st you will get an uplift of 7/12 of the annual increase. 

So if you retired say on 31st May you'd get 10/12 of the annual increase.

Is there a revaluation of you benefits at the point you retire? Surely there must be because otherwise someone retiring on December 31st would get a pro rata increase of 3/12 of the annual and lose out compared to someone who retired earlier in the year.

Sorry if this has been answered previously - I thought I was sure but now I'm not! Thanks in advance.

zagubov

We need more information.
How old are you, and which home nation are you working in (assuming -hopefully - you're in the UK) ?

Organgrinder

Tps, england and wales. In npa65 and career average schemes. Under 60.

spaniel101

Organgrinder said:

Could someone clarify the situation with regard what happens if you retire mid year (ie.at the end of the school year).

I've read somewhere that the pension increase the following year is pro-rata, ie if you retire on Aug 31st you will get an uplift of 7/12 of the annual increase. 

So if you retired say on 31st May you'd get 10/12 of the annual increase.

Is there a revaluation of you benefits at the point you retire? Surely there must be because otherwise someone retiring on December 31st would get a pro rata increase of 3/12 of the annual and lose out compared to someone who retired earlier in the year.

Sorry if this has been answered previously - I thought I was sure but now I'm not! Thanks in advance.

I wouldn't say 'lose out'.  If you retire mid year, you have favoured Salary payments since the last April revaluation and although small, will have also received the in-year Salary increase  (CARE Pension Accrued is Revalued once per year, every April by Treasure Order, based on the previous September CPI rate, released every October).   You will have also paid more pension contributions and accured more pension (than someone retiring earlier in the year).   Horses for courses.

It may be that you'll receive a small 'Second-Bite' following year end, for the portion before being put into payment (9/12) up to the date of retirment once all your final figures are known, and the subsequent 3/12 pension-in-payment CPI uplift, but im sure someone more familiar with TPS will be along to clarify.

Organgrinder

Totally disagree. It's not horses for courses at all. It is indeed "losing out" unless there is an element of revaluation.

Let's take two people each on £50k, each with 30 years service at point of retirement. At the point of retirement one goes on Aug 31, one on April 31st.

Both theoretically get exactly the same pension at retirement. But the following April one gets 11/12 of the annual increase, the other 7/12. So surely a revaluation at the point of retirement is the only fair way.

Silvertabby

That's just the way of the (public sector pensions) world.  The pro rata pensions increase applies to all public sector pensions, not just TPS.  

Organgrinder

Yes .... so seeking clarification on whether there is any revaluation at the point of retirement.

spaniel101

Organgrinder said:

Totally disagree. It's not horses for courses at all. It is indeed "losing out" unless there is an element of revaluation.

Let's take two people each on £50k, each with 30 years service at point of retirement. At the point of retirement one goes on Aug 31, one on April 31st.

Both theoretically get exactly the same pension at retirement. But the following April one gets 11/12 of the annual increase, the other 7/12. So surely a revaluation at the point of retirement is the only fair way.

But for they wouldn't be the same, because one would have retired 4 months before the other.   So either one has 29.08yrs, or the other has 30.41yrs  (if membership commenced on exactly the same date).   

As I say, I'd imagine this likely comes down to second-bite at the end of first year of pension-in-payment but someone with TPS second-bite experience may wish to clarify.

Organgrinder

I said quite clearly they have 30 years service at the point of retirement.

If you don't know the answer that's fine. I don't want speculation, just a definitive answer.

hyubh

Organgrinder said:

Could someone clarify the situation with regard what happens if you retire mid year (ie.at the end of the school year).

I've read somewhere that the pension increase the following year is pro-rata, ie if you retire on Aug 31st you will get an uplift of 7/12 of the annual increase. 

So if you retired say on 31st May you'd get 10/12 of the annual increase.

Is there a revaluation of you benefits at the point you retire? Surely there must be because otherwise someone retiring on December 31st would get a pro rata increase of 3/12 of the annual and lose out compared to someone who retired earlier in the year.

Sorry if this has been answered previously - I thought I was sure but now I'm not! Thanks in advance.

I don't know, I think your question is pretty clear . It is true pro-rating of the first pension increase applies to all public sector schemes. So, as you state, that leaves the question of CARE in service revaluation for the the final part year, since the last proper revaluation will be on the 1 April prior to retirement.

I believe what you're looking for is what called the 'leaver index adjustment' in the scheme regulations:

https://www.legislation.gov.uk/uksi/2014/512/regulation/44/made

This is something different from 'second bites', which deals with a similar issue for 80ths scheme lump sums, rather than 2015 CARE pension.

Organgrinder

Thank you.