Teacher Pension - reducing hours

Avantime1

Good evening - first time post!

I'm a UK teacher with 9 years experience. Next year I go onto UPS3, along with a head of dept TLR. I became a teacher in 2014, so my pension will come under the average salary scheme, with my best average over 3 years in the last 10 I think. I'm 54 and looking to retire at 62-65 years old.

My question; if I do 3 years at this top rate (to set the average), and then reduce my hours for the last 6-7 years will my pension drop by much? Or is it purely baed on those best 3 years?!

Hopefully some Teachers on here! Many thanks!

Dazed_and_C0nfused

Do you have any service of note in the final salary part of the scheme?

A higher salary will be helpful but it might be quite limited help in the old part of the scheme if you only have say 6 months service in it.

Avantime1

Dazed_and_C0nfused said:

Do you have any service of note in the final salary part of the scheme?

A higher salary will be helpful but it might be quite limited help in the old part of the scheme if you only have say 6 months service in it.

No, only about 6 months or so. 

Universidad

Couple of misunderstandings in your post, I think. 

The way the new "career average" works is not based on "your best salary at some point". That's actually how Final Salary used to work!

With CARE, you literally get a proportion of each year's salary each as an amount of annual pension. So if you earn, for example, 57,000 this year then you get 1000 pounds of annual pension. If you earn 28500, then you get 500 pounds of annual pension. 

It's revalued, while you stay an active member of the scheme, slightly above the rate of inflation, so it does grow slowly over time too.

The other thing is that because you've been working since before they ended the Final Salary scheme, and have some Final Salary service, then you will have the option to take all the years from 2015 to 2022 as Final Salary pension or CARE pension due to something called the "Remedy".

So you might actually have about 8 years of final salary pension, rather than 6 months, if that's what you choose. Although the old Final Salary scheme is closed, it is still linked to your current salary. So what salary you are earning does still matter for this pension - however, your Final Salary pension will be based on full time equivalent hours, so going part time does not reduce it - but taking a cut to your rate of pay would!

As a matter of fact most people I've seen who have the choice between FS or CARE for those Remedy years will do better taking the CARE pension for that optional period, because - due to below inflation pay rises - we've all been taking pay cuts for decades at this point

kpk2000

If you started teaching in 2014 then virtually all of you service from April 2015 onwards will be in the Career Average scheme. The best 3 out of 10 years only applies to the Final Salary schemes before 2015.

The Career Average scheme adds 1/57 of your annual salary for THAT year to the total amount which is then uplifted by inflation every year until you retire. This happens for each year in TPS. The normal retirement age for this is linked to your state pension age which is currently 68 I would think, so if you take the pension earlier than 68 then the total amount will be reduced for each year before 68.

Any pension before April 2015 will be in the final salary scheme and that is where the best 3 in past10 years comes into the calculation but this amount will be quite small due to only having 8-9 months in this if you started in Sep 2014.

kpk2000

Actual I’ve realised you should have more years in the Final Salary scheme as you were in the final salary scheme before 2015 so are covered by the McCloud judgement - this means that 2015-2022 period should also be in the final salary scheme. 

If you have 7.5 years in the final salary scheme then the best 3 years from the past 10 would matter quite a bit.

Have you got a benefit statement from TPS that shows the current figures?

Since April 2022 all teachers are in the Career Average scheme though so you will have accrued this since April 22 and will have bits of both Final Salary and Career Average showing on your benefit statement?

Fermion

My understanding is that reducing hours in itself won't impact the career average salary it's just that it will take you longer to accrue years service. The important point is whether the full-time equivalent salary changes.

My wife was a teacher but on the original TPS. She held a post of Vice Principal for a number of years but then took a career break for children before returning as a main scale teacher on reduced hours. In her case there was a significant difference in full-time equivalent salaries but under the old scheme they could do something called an hypothetical calculation which effectively ring-fenced the career average salaries if there was a career break. Worth giving TPS a call to discuss. 

hugheskevi

kpk2000 said:

Actual I’ve realised you should have more years in the Final Salary scheme as you were in the final salary scheme before 2015 so are covered by the McCloud judgement - this means that 2015-2022 period should also be in the final salary scheme. 

To qualify for 2015 Remedy you have to have been in public service as at 31st March 2012, not just before 2015.

Universidad

hugheskevi said:

To qualify for 2015 Remedy you have to have been in public service as at 31st March 2012, not just before 2015.

Thanks for the correction - that at least makes it crystal clear that there's essentially no way to significantly reduce the value of the pension by changing roles, except with respect to future accruals.

Even if you go part time, or take a role on a lower pay band - when it comes to pension already banked, CARE doesn't care.

Avantime1

Ahhh, many thanks to you all.

I was taking an all day Art exam today, so was able to take a better look. The one year (Sept 2014) returns a very small amount as you've said. I shall base my figures on 1/57th average; I did a spreadsheet and it lines up with my TPS statement. 

In terms of strategy, it may be good to do another 4-5 years as I am, then maybe 80 or 60% thereafter. As the mortgage is paid off this time next year it should be doable...