Teacher's Pension - working beyond 60

CipherFox3

Hello.  I am a teacher and about to turn 60!  I have some years in the final salary scheme and also in the career average scheme.  I am still working full-time, but have not been in a TPS school since 2014.  Recently, I secured a post in a TPS school for September, which is full-time.

Will I be able to contribute either to the final salary scheme or to the career average scheme leading up to my 60th birthday and beyond, or both? 

Also, if I don’t retire at 60, does that mean that the money would be lost?  Or, if I take it and continue working, would it then be subject to abatement? 

I’d be grateful for any advice…

katejo

CipherFox3 said:

Hello.  I am a teacher and about to turn 60!  I have some years in the final salary scheme and also in the career average scheme.  I am still working full-time, but have not been in a TPS school since 2014.  Recently, I secured a post in a TPS school for September, which is full-time.

Will I be able to contribute either to the final salary scheme or to the career average scheme leading up to my 60th birthday and beyond, or both? 

Also, if I don’t retire at 60, does that mean that the money would be lost?  Or, if I take it and continue working, would it then be subject to abatement? 

I’d be grateful for any advice…

I am on a university DB scheme. The final salary scheme came to an end in 2016 and switched to career average. We were told that we would get the full final salary part with no reduction if we continued working until 60. I did that and I am now 62. My guess is that you can carry on paying into your career average scheme until you decide to stop. I don't know whether your scheme allows you to take part of the pension while still working. Mine doesn't. I have to stop work first. Why do you think you might lose pension if you work beyond 60? 

CipherFox3

Hey - thank you for your reply!  You raise an important point - I don't know if I can take that part of the pension while still working and simultaneously contributing to the other career average part.  It's a bit of minefield.  If I don't take the final salary pension at 60, what would happen to this year's money? - I don't know if it would be lost exactly, but if it isn't, what actually happens to it?

kpk2000

Have a look at the TPS group on Facebook run by David Fountain. They will be able to give you more precise info.

Without any specific details
to hand, I believe if you take the TPS final salary at or after 60 and then work in a state school then abatement will apply if the TPS plus the new salary are over the “final” salary calculation. 

If you leave the FS pension then that is the more uncertain part that others on the Facebook group will know about. My basic knowledge says the FS after 60 will be paid as a lump sum when you take it after 60 but this will mean more income tax to be paid and there are some other obscure rules as well I think related to the final salary calculation. Best to ask in the Facebook group. 

katejo

CipherFox3 said:

Hey - thank you for your reply!  You raise an important point - I don't know if I can take that part of the pension while still working and simultaneously contributing to the other career average part.  It's a bit of minefield.  If I don't take the final salary pension at 60, what would happen to this year's money? - I don't know if it would be lost exactly, but if it isn't, what actually happens to it?

If you don't take the final salary part at 60, it will be there for you to take whenever you are ready. I had to pay into mine until I was minimum 60. Ask whether you have a 'flexible' retirement option. SAUL doesn't but USS does.

SarahB16

katejo said:

CipherFox3 said:

Hey - thank you for your reply!  You raise an important point - I don't know if I can take that part of the pension while still working and simultaneously contributing to the other career average part.  It's a bit of minefield.  If I don't take the final salary pension at 60, what would happen to this year's money? - I don't know if it would be lost exactly, but if it isn't, what actually happens to it?

If you don't take the final salary part at 60, it will be there for you to take whenever you are ready. I had to pay into mine until I was minimum 60. Ask whether you have a 'flexible' retirement option. SAUL doesn't but USS does.

@katejo If you don't mind me asking have they confirmed that to you in writing?  For example, let's say at 60 you could have drawn a £15k per annum pension but instead you are not as you are continuing to work.  Imagine at age 63 you decide to retire so you have gone without 3 x £15k = £45k of pension.  What has your pension provider said to you re how you will receive this £45k?  Will each year your pension be higher by c.£2k for example as I doubt they will just give you the £45k.  You want to check how much extra pension you will receive per annum from not currently taking your pension.  An alternative is you leave your job so that you can take your pension and work in a supermarket for a few more years but at least you are not losing out on taking this pension.  

I really would double check how much higher your pension will be from continuing to work as you are missing out on taking the pension. 

hyubh

SarahB16 said:

katejo said:

CipherFox3 said:

Hey - thank you for your reply!  You raise an important point - I don't know if I can take that part of the pension while still working and simultaneously contributing to the other career average part.  It's a bit of minefield.  If I don't take the final salary pension at 60, what would happen to this year's money? - I don't know if it would be lost exactly, but if it isn't, what actually happens to it?

If you don't take the final salary part at 60, it will be there for you to take whenever you are ready. I had to pay into mine until I was minimum 60. Ask whether you have a 'flexible' retirement option. SAUL doesn't but USS does.

@katejo If you don't mind me asking have they confirmed that to you in writing?  For example, let's say at 60 you could have drawn a £15k per annum pension but instead you are not as you are continuing to work.  Imagine at age 63 you decide to retire so you have gone without 3 x £15k = £45k of pension.  What has your pension provider said to you re how you will receive this £45k?  Will each year your pension be higher by c.£2k for example as I doubt they will just give you the £45k.  You want to check how much extra pension you will receive per annum from not currently taking your pension.  An alternative is you leave your job so that you can take your pension and work in a supermarket for a few more years but at least you are not losing out on taking this pension.  

I really would double check how much higher your pension will be from continuing to work as you are missing out on taking the pension. 

Different schemes work differently. If we stick with Teachers final salary (i.e. what the OP is concerned with), that doesn't have the concept of a late retirement factor, instead you get the arrears paid as a (taxable) lump sum. However not even all public service final salary schemes work like that.

hyubh

CipherFox3 said:

Hello.  I am a teacher and about to turn 60!  I have some years in the final salary scheme and also in the career average scheme.  I am still working full-time, but have not been in a TPS school since 2014.  Recently, I secured a post in a TPS school for September, which is full-time.

Will I be able to contribute either to the final salary scheme or to the career average scheme leading up to my 60th birthday and beyond, or both? 

On that specific point, final salary accrual ended for everyone on 31 March 2022. However the CARE scheme will likely be in your better interests anyway, given your age (higher accrual rate).

Also, if I don’t retire at 60, does that mean that the money would be lost?

No. But the manner in which it isn't lost may not be optimal.

  Or, if I take it and continue working, would it then be subject to abatement? 

Relative to your 'salary of reference'. Brief details are on the TPS site (https://www.teacherspensions.co.uk/members/planning-retirement/types-of-retirement/normal-age-retirement.aspx)

I’d be grateful for any advice…

kpk2000's suggestion was a good one. To be honest I wouldn't say this board has any true up-to-date TPS experts, we're more an LGPS and CSPS crew when it comes to public sector pensions...

katejo

SarahB16 said:

katejo said:

CipherFox3 said:

Hey - thank you for your reply!  You raise an important point - I don't know if I can take that part of the pension while still working and simultaneously contributing to the other career average part.  It's a bit of minefield.  If I don't take the final salary pension at 60, what would happen to this year's money? - I don't know if it would be lost exactly, but if it isn't, what actually happens to it?

If you don't take the final salary part at 60, it will be there for you to take whenever you are ready. I had to pay into mine until I was minimum 60. Ask whether you have a 'flexible' retirement option. SAUL doesn't but USS does.

@katejo If you don't mind me asking have they confirmed that to you in writing?  For example, let's say at 60 you could have drawn a £15k per annum pension but instead you are not as you are continuing to work.  Imagine at age 63 you decide to retire so you have gone without 3 x £15k = £45k of pension.  What has your pension provider said to you re how you will receive this £45k?  Will each year your pension be higher by c.£2k for example as I doubt they will just give you the £45k.  You want to check how much extra pension you will receive per annum from not currently taking your pension.  An alternative is you leave your job so that you can take your pension and work in a supermarket for a few more years but at least you are not losing out on taking this pension.  

I really would double check how much higher your pension will be from continuing to work as you are missing out on taking the pension. 

I may have misunderstood the OP's original question. I thought they meant that they wouldn't get their final salary pension at all if they didn't take it at 60. However, I am not sure that I fully understand your argument here. I requested projections of my pension for potential retirement at different ages. My statement gives figures and shows how much my CARE pension will be reduced by if I claim it and stop paying into it before 65, 66 and 67. It states that my final pension part  won't be affected and will increase in value between 2016 (when it was closed) and the date when I retire. 

CipherFox3

Sorry for a late reply!  Thank you all very much for your responses - it's been really very useful to have your comments on this one.  So...just in case any teachers out there see this thread, I have some firm answers from TPS - they say that if I was to draw the pension at 60 and work, I would be subject to an earnings limit, which is my gross annual pension subtracted from my salary of reference - they work this out.   If I exceeded that, the pension would be suspended.  I have therefore decided not to take it at 60.  The pension would be payable on either my normal pension age birthday (60) or the day after I leave service, whichever is later.  If I am in service on my 60th birthday (which I will be) it will not be backdated.  However, the final salary pension and lump sum are index-linked, and so they will grow in line with inflation.  At the same time, I will be contributing to the career average scheme.  They have also recommended 'faster accrual' - instead of contributing the standard 1/57th of my earnings next year, this would mean contributing 1/55th, 1/50th or 1/45th of my salary.  This is something you have to apply for each year and should do that in January in order to make it effective for the next financial year from April.  Hope this is useful information for anybody else in the same position, and thanks again for all of your responses - just talking about it with other people always throws up new information and perspectives.

zagubov

Are you turning 60 before or after starting your job in September? This could make a big difference to your choices.

For example, if you retired and accessed your FS pension before you turn 60 and also start your new job after a gap of at least one day-

your FS pension could be paid out but would be actuarially reduced (permanently lowered because you’ll be receiving it for longer).

However if you start your new job your pension won’t be abated which could have potentially involved a much more serious clawback of money, that you may never see again. Plus you would earn a new CARE pension which may help compensate for the reduction in your original FS pension.

Do some research - inquire about the “one day rule”.