Teacher phased pension

Morsing_2

Good morning,

My wife, at 60, has gone down to two days a week with a view to retire completely at 62. The Teacher's Pension company Wesleyan, is impossible to contact, we have tried for years, but we now need to fill in the phased retirement pension claim gobbledegook.

I have pasted their guide to the phased retirement percentage section below, erroneous apostrophe and all, and I am sure the actual calculation makes sense, only the word salad below does not.

I asked ChatGPT a few months ago if her pension would be affected by when she started taking it and it said no.

So, according to the below, if she takes 75% now, when she enters phase two, 30 years of her pension will be void. That, obviously, cannot be correct. Does anyone have experience with a teacher's phased pension that can explain if there are any down-sides to taking the 75% in phase one?

Ta

From form:

Notes: How further phased retirements are calculated.
With final salary, the percentage of benefits you wish to take is applied to the accrued reckonable service as at the relevant date. For the second phased retirement the percentage is applied to the total accrued reckonable service as at the new relevant date. That is the total service in it's entirety, both that accrued before the first phased retirement and that accrued during the first phased retirement. We then deduct from this the amount of service used in the first phased retirement to arrive at the total amount of service to be used in the second phased retirement. We do not simply apply the percentage against the remaining, unused accrued service.
For example, a member with 40 years of reckonable service takes 75% of their benefits at their first phased retirement. The first phased retirement benefits will be calculated using 30 years of reckonable service. 2 years later the member decides to take a further 75% in a second phased retirement. The calculation for this is 75% of 42 years, from which we deduct the original 30 years,
which equals 31.5 years minus 30 years. Hence the benefits for the second phased retirement will be calculated using 1.5 years of reckonable service. This is because members can only ever take 75% of the their total benefits during phased retirement, or conversely must leave at least 25% of their benefits unused before taking their final age, early or ill-health retirement. With career average, the percentage of accrued earned benefits taken in the first phased retirement is deducted, and future phased retirements are applied against the reduced, although still growing, accrued earned pension as and when the further phased retirement is taken.

DRS1

So, according to the below, if she takes 75% now, when she enters phase two, 30 years of her pension will be void. That, obviously, cannot be correct. 

Why not?  If she takes 75% of the 30 years in phase 1 she can't expect to take another 75% of those same 30 years in phase 2.

I think the example in the note is only talking about taking multiple phased retirements not what happens when she takes her final outright retirement.  On the final retirement she would presumably get the untaken 25% of the 30 years.

Morsing_2

"Why not? [...]"

Because that would be... insane? No-one in their right mind would take a phase retirement if it meant you would get vitually nothing after you fully retired. 

"  If she takes 75% of the 30 years in phase 1 she can't expect to take another 75% of those same 30 years in phase 2."

That is not how pensions work. It's not a savings account.

Ta

On-the-coast

But surely the “phase 1” retirement benefits continue to be paid during phase 2?
Admittedly that wall of text is confusing. A worked example would be helpful. 

DRS1

There is a teachers pension scheme group on Facebook.  You might like to try your question there.

Because that would be... insane? No-one in their right mind would take a phase retirement if it meant you would get vitually nothing after you fully retired. 

Did I say virtually nothing?  I said presumably she would get the other 25%.

Let's make up some figures - just pension - ignoring any adjustments for taking anything early or taking a lump sum. And ignoring any extra years of service after phase 1 partial retirement And ignoring pension increases

Say her 30 years service entitles her to a pension of £10k pa at age 62

Say she takes a pension of £7500 pa at 60 That is 75% of the pension her 30 years entitles her to.

She gets to age 62 and fully retires at that time she can get the remaining £2500 pa.  

Add the £2500 pa to £7500 pa and that gives her the £10k pa she was entitled to for the 30 years.

That is a massive oversimplification but I hope it gives you a bit of understanding of how I think it would work.

Someone who knows what they are talking about will be along shortly to put me right.

Morsing_2

Thanks, that would make more sense. You made it sound like for two years she'd be paid £7 500 alongside her part time salary and when she then retired fully, she'd be paid £2 500.

However, I do not get what you describe from the "guide" they put in the form.

Thanks for the Facebook hint, will try that.

DRS1

Morsing_2 said:

Thanks, that would make more sense. You made it sound like for two years she'd be paid £7 500 alongside her part time salary and when she then retired fully, she'd be paid £2 500.

However, I do not get what you describe from the "guide" they put in the form.

Thanks for the Facebook hint, will try that.

With a DB pension scheme like TPS when you take your pension it is paid for life.  And when you die your surviving spouse or civil partner (if any) gets a (smaller) pension for the rest of their life.

It is quite different from a DC pension where you maybe drawdown an amount until the pot runs out.

zagubov

Before going any further I'd recommend she gets her ducks in a row before launching into this. 

-checking the Pension service has her private (not work) email, 

-checking her work history on the pension website is accurate, 

-deciding if she's happy with her existing finances (credit cards, bank accounts etc.) in case she wants to take out new ones while still fully employed, 

-downloading all payslips and work documents to keep permanently with her bank statements, 

-checking which TPS schemes she's in (could be as many as three) and what age she can collect them without reduction for taking them early. 

-Whether she needs an inheritable lump sum at the start or a non-inheritable steady income through more senior years.

-I’d second the suggestion of joining the facebook group. There are useful guides about the many ways you can both retire and continue working and earning as you gradually ease yourself out of working life and into retirement.

Different options on how to retire from teachng while working less are available depending whether you are in England&Wales, Scotland or Northern Ireland.

hyubh

Morsing_2 said:

Thanks, that would make more sense. You made it sound like for two years she'd be paid £7 500 alongside her part time salary and when she then retired fully, she'd be paid £2 500.

However, I do not get what you describe from the "guide" they put in the form.

The section is trying to elaborate how multiple phased retirements work within the framework of a rule that says you must leave at least 25% if not fully retiring. It explains that for final salary benefits, this means 25% of the total pensionable service must be left, not 25% of the remainder. Total - i.e. you don't somehow lose a previous phased benefit by drawing a second, the wording is purely in respect of how much you can take as an additional tranche without retiring fully. (Pensionable/reckonable service not pension, since the total pension is not yet known.)

That said, a large chunk of that section is only historic now, since your wife (as all members of public service schemes) stopped final salary accrual in 2022 (or earlier, depending on her McCloud choice). So if she had a first phased retirement now and a second in two years time or whatever, the total final salary service then would be the same as now, since the period in between would be all CARE accrual.

Morsing_2

DRS1 said:

Morsing_2 said:

Thanks, that would make more sense. You made it sound like for two years she'd be paid £7 500 alongside her part time salary and when she then retired fully, she'd be paid £2 500.

However, I do not get what you describe from the "guide" they put in the form.

Thanks for the Facebook hint, will try that.

With a DB pension scheme like TPS when you take your pension it is paid for life.  And when you die your surviving spouse or civil partner (if any) gets a (smaller) pension for the rest of their life.

It is quite different from a DC pension where you maybe drawdown an amount until the pot runs out.

No, this is one of my gripes when people talk about pensions. What yuo describe above is a savings account, not a pension. Pensions do not run out. It might be a "pension" savings account, but it's still a savings account.

Morsing_2

zagubov said:

Before going any further I'd recommend she gets her ducks in a row before launching into this. 

-checking the Pension service has her private (not work) email, 

-checking her work history on the pension website is accurate, 

-deciding if she's happy with her existing finances (credit cards, bank accounts etc.) in case she wants to take out new ones while still fully employed, 

-downloading all payslips and work documents to keep permanently with her bank statements, 

-checking which TPS schemes she's in (could be as many as three) and what age she can collect them without reduction for taking them early. 

-Whether she needs an inheritable lump sum at the start or a non-inheritable steady income through more senior years.

-I’d second the suggestion of joining the facebook group. There are useful guides about the many ways you can both retire and continue working and earning as you gradually ease yourself out of working life and into retirement.

Different options on how to retire from teachng while working less are available depending whether you are in England&Wales, Scotland or Northern Ireland.

Thanks, very useful.