Hi David, thanks for all that you do to help teachers through this complicated process. I've just followed the link on the Facebook page to this video, as I'm pretty sure it applies to my circumstances. One quick question, if I may? My birthday falls towards the end of April, so when would be the best date to opt out? Hope you can help, thanks in advance.
Interesting question. It will depend on your figures but I suspect opting out of May (by sending in the form during April) might be best. This would trigger your pension on 1 May, after you have reached your normal pension age for the scheme. If you were to opt out of April then you miss out on two aspects of the scheme and gain only a few days pension (compared to gaining a whole month that would happen if your birthday was 1 April). Aspect 1 - you add another month to the CA scheme (April). Aspect 2 - your existing CA pension will get the 1.6% bonus that is added on top of inflation that is only paid if you are "in" the scheme after 8 April.
@dfountain Thank you so much for your prompt reply! This (along with the Facebook page and your UA-cam videos) has really helped me get my head around things. Your help is much appreciated.
On further reflection after watching more of your brilliant videos, it seems I would be best to opt out at 59 years and 11 months and thereby avoid the abatement trap altogether. I will also take independent advice, but it sounds like a sensible option.
Yes, the tricky part with this is that you cannot simply "opt out", you need to have a break in employment. Most schools will happily arrange a day's break to allow them to keep an experienced member of staff but...it does depend on the school...and you have to arrange this ending of one contract, having a period of unemployment, and then re-employment so that your pension is applied for in plenty of time to have it start during that break.
Hi David thanks for this video can i just check with you. I am turning 60 this April and am planning to stay in teaching for another year. So should i opt out fro. April 2025... but leave at the end of August? Thank you
It's probably too late to take your pension before 60 as that would require getting your school to agree to a break in employment, but that would let you get your pension on top of your salary with no restrictions. If you are working part-time then your NPA60 pension could be taken from THIS April and see it top up your salary (subject to the rules on abatement). You should probably also check if you need to "lock in" your best years BEFORE the end of February otherwise your FS pension may lose value by next April. Only by checking your Salary of Reference can determine WHEN might be the best date as to when to take the FS pension.
Hello David, I am in the tapered pension scheme. I am 60 in November this year. I work full time and I am UPS3. Currently I need my income. From looking at your videos and other research I have done, this is the plan I am considering: In November when I turn 60 I will take my final salary pension. Because of abatement, I will ask my employer if I can reduce my days to 4 days in stead of 5 days as my final salary pension is approximately £8000 per year which is approx the equivalent of a days pay. I will continue working four days a week and continue to contribute to the career average scheme. Am I missing anything? Do I need to reduce my working week as I've suggested by a day? Do I need to finish employment for 24 hours and then start on a new contract? Are there other options linked to the McCloud judgement that I should be considering. Thank you so much for your help. It seems impossible to find anyone to talk to who really understands this. I have also sent you a message on your blog with a slightly different question that I also needed some clarity on.
Oh there's a few aspect to this that we may need to consider. Firstly, whilst you ARE a tapered member this is something that is being cancelled by the McCloud judgement. Your transition date as shown on your statement is NOT going to be one that you can choose. The only choices will be to transition from final salary to career average on either 1 April 2015 or 1 April 2022. This is likely to see you increase your final salary pension (most teachers are better off doing it this way - but to be sure I would need to see your employment history). If you wait (big if here) until you are 60 before taking your pension then you do not need to have a break in employment but as you note it brings into play the issues around abatement and limits on how much the pension can pay whilst you are still working. If you were to take the pension BEFORE 60 then you would have to take both pensions at the same time BUT it removes the problem of abatement. You could then continue to work 5 days rather than 4 if you wished. However in order to do this you would need to be unemployed, or at least not employed in a TPS eligible post, ON the day you start your pension.
@@dfountain You're videos have certainly been helpful, but I feel as if I'm going round in circles. I'm thinking of doing similar to Carolyn, I'm 60, but reducing 2 days and only working 3 from September. I too feel that it's impossible to get any advice and it seems to be a minefield of potential problems. Planning on just taking my Final Salary Pension, but will this change each year?
Hi David ...I was 60 in February and following your advice I opted out for MArch. I now need to apply to take my pension but am stumped by some of the form. I will be going to take 0.6 next year, again following your advice in terms of abatement and so on. I am also confused as to whether I should tick the Career Average (NPA equal to State Pension Age) in addition to ticking the Final Salary (NPA 60) part on the form. What on earth is the Lifetime Allowance - do I tick that or not? #Confused
Going to 0.6 means you are unlikely to hit the abatement limit, but NOT taking the CA pension at this time would also reduce the chances of doing that. As for the LTA, you only need to worry about that, I think, if your pension is over £35k
In the section from 10mins in - I'm seeing potential errors in the calculation? Can I check with you: (1) 1250 per month divided by 60 per month = 21 months not years (less than 2 years >>69 yrs old) (2) If it was taken from April, then it should be 5x1250 =6250 /60 = 104 months = 8.6 years (from age 67) >> 75 years old. Am I missing something here? thanks
Yes, a year working at £40k adds £700 to the ANNUAL pension. This means that each month is adding 1/12th of £700, so about £60. Work a month and the ANNUAL pension goes up £60.
@@dfountain Thanks. I see. My current Career Average Scheme (Apr22-Sep24) has a current value for an Annual Pension of around £1400 (payable from 67). Does that CA pension vanish if Entitlement Day opted for? or does it remain roughly as it is? or how should I factor that into the calculation? And does it make any difference if part time contract (0.66)?
Hi David. Thank you so much for your videos. I am learning so much, but at times feeling overwhelmed by the amount of information. I will turn 60 in August 2024 and am thinking of retiring at Christmas 2024 but still working full time up until then. I started teaching in 1988. Is there any benefit to me opting out of the FS the day after I turn 60? Thanks
Yes, but you'll need to do the maths to work out if having 4 extra months worth of FS pension outweighs the amount added to the CA pension for those months (in most cases it will and for someone with 34 years service in the FS scheme that is most likely) Opting out in July will start your FS pension ON your 60th birthday, though if your birthday is towards the back end of August then you may consider opting out DURING August and your pension then starts on 1 September. You are unlikely to be in trouble with abatement and your FS pension will be less than half your salary and despite being paid for around 8 months you will have 4 months of that financial year without a salary.
@@dfountain Thank you David. My birthday is after the 16th so is that the back end? Is opting out at 60 also the trigger for receiving my lump sum and pension monthly or is that a seperate form I fill out for retirement? If it is a seperate form, how long before I fill that out please?
Hi David, I I am 62 and considering going part time for 2 days a week in September. I want to access my full pension then as an enhanced lump sum plus reduced monthly sum I am a UPS 3 teacher on about £45,000 per year. I believe I have to organise this with my head teacher who has to be in agreement. I start a new contract with a 1 day break in service if agreed but was considering opting out of the pension for that new contract if it benefits me financially as suggested in your video. What would be your suggestion?
As you are already OVER 60 then if you were teaching before 2007 you can access your final salary pension NOW and WITHOUT taking a one day break in your employment - in other words you can remove the requirement to get the agreement with your Head entirely...they do not need to be involved in the process. Of course, you will be subject to the rules on abatement if you take your NPA60 pension in full, but if you are dropping to 0.4 this is very unlikely to result in any pausing of the pension since your pension would have to be worth well over half your current salary before it reached the limit. I would get in touch, and let me work on your actual figures so we can see how much you can get simply by opting out for a month. In this regard the sooner the better since it may even be worth getting a month's worth of pension paid out in THIS financial year, before April 2023.
Hi David, if I only pay into the career average scheme from April to August because I have taken my FS pension like in the video - will I get back those career average payments since I have not paid in for a full year for it to count towards a pension? Thanks
This is an area over which there is some uncertainty. The TPS website says that this service can be taken as an "annuity", this is a lower valued pension. However, I was told by someone from the TPS that it would be possible to transfer this service into a private pension - much better value, but I have yet to hear from anyone who has done this.
Hi David Thank you for this very informative video. I am 60 in August 2025. I have been a teacher since 1988! I've always worked part time. I have about 21 years full time equivalent service. I always planned to keep paying my pension beyond 60 to add more years of service. Is this silly? Is it better to take my pension at 60 and continue working and paying into the other pension scheme ( retirement at 67)?. Best wishes Sean
Silly, no, but it may not be the best option and you are missing one key factor. The NPA60 pension scheme can no longer add any years...the last day for that was 31 March 2022. Everything from 1 April 2022 onwards is now in the career average scheme. The problem for you is that the NPA60 pension gets NO enhancement for being left later than 60 - unlike the 3%-4% reduction that is applied for every year you take it "early" there is NOTHING added if you take it late. Given that you cannot add any more service to it either then the only reasons not to take it at 60 are: 1) You are climbing a promotion ladder and your final salary is going to increase - unlikely given that most teachers have had over a decade of below inflation pay rises and most have their best calculation from using salaries at the maximum of 10 years ago! 2) You've decided to take it early and avoid the abatement issue! (Remember these are my opinions and I am not a financial adviser) If you take the pension AT 60, then you run into a limitation on how much the pension is allowed to add to your salary (see my video on abatement). Take the pensions BEFORE you reach 60 and there are no limits. You can continue in the pension scheme after taking the pension, though you have to work at least 1 year for it to "qualify".
Hi David I work and have for many years part time .7 on UPS3. Is the Abatement issue based on full time salary? My highest three years salary on my statement is very near the bottom of my statement. From your information I am thinking I should miss a month of pension contributions to prevent these figures dropping off the bottom! I'm understanding that when I continue working after 60 I must ensure my pension plus salary is below the salary of reference. I think you are suggesting I consider taking my pension a few months early to avoid Abatement completely? Thank you Sean
On your website, there is a comment about Entitlement day and how you have to have a break in employment if you want to retire early - does this mean that you need to resign the month before you claim it early?
It means you need to negotiate a break in employment and give yourself enough time to have applied for the pension in time for it be started on the day you are not employed as a teacher. You can unilaterally resign in line with the conditions of your contract, which for teachers in England and Wales means giving at least 2 months notice to leave on 31 December or 30 April and 3 months notice to leave on 31 August. Then arrange any new contract to start on a date after you have set up as the start of your pension. However, most teachers will talk to their HT and arrange for a break in contract of just a single day. Leaving on 31 August but starting their new contract on 2 September allowing them to have their pension begin on 1 September. The TPS want a minimum of 6 weeks notice in any application for the pension.
@@dfountain So if you aren't taking another contract, your break is just resigning normally and instead of going back, you just get your pension from 1st Sept?
Hi David. What happens if a person has reached their NPA and wants to take their pension but has, at that point, paid into the career average for < 12 months (and during those months has opted in/out a few days to prevent their best of 3 calculation decreasing). Do they need to work longer than planned to meet the 12 month rule for entitlement to benefits from CA scheme?
This is an interesting question and one to which there is a bit of a black hole in the legislation. I believe it has been referred to in Parliamentary discussions under the heading of "The Pensions trap". The problem surrounds the period of time after they take their NPA60 (or 65) pension. Normally this would be called "additional service after retirement" and the response I have had from TPS is that this service would need to be a minimum of a further 12 months (365 days). The CA service built up from before the person took their NPA60 pension wouldn't need such a minimum amount because the regulations for this part DO allow the service time from before they were moved into the CA scheme to be included. For example, a teacher reaches 60 this year and works through to their retirement at the end of August. They take their NPA60 pension but leave their CA pension untouched. Their CA pension from April to August is 5 months. They then take up a new post and pay into the scheme from October. From what I have been told (and only at the lowest levels have I had this conversation!) their 5 months of April to August would qualify for a pension BUT would not contribute to the minimum period of 12 months needed for their October onwards service to count! Hence the term "trap". We are awaiting more details from the scheme on how this will, if at all, be addressed.
@@dfountain thanks for your time on this David. I'll keep my eye on TP website. Re an earlier conversation on the best 3 years and opting in/out. I applied to opt out and then in again a few days later. Haven't heard (yet) that this is a problem. It might be of interest to other readers.
'Opting' out of the TPS has to be done in whole months whilst you are in a regular contract. Of course it is possible to have just a single day's break in service if your contract with a school can end and then following a short break a new contract started. To put this into context though do consider the amount "lost" or "sacrificed" by missing out on a month is relatively small. For example a UPS3 salary is £41,604. One month of that salary is £3,467. One 57th of that (the amount added to the annual career average pension) is £60.82 - based on you taking that at the state pension age (67 or 68). Take it earlier and it's a lot less. In this example if the teacher was on a 0.5 contract then the sacrifice is half that of course. It strikes me that anyone who is on a zero hours contract might be well served in opting out each August (or September if that is when they are paid for the work done in August) when they have NO income!
@@dfountain Hi David ... I'm not on HP contracts at present but a full time role in college. Fyi - will let you know if the few days opt in/out application goes through ok.
I am 63 years of age; my birthday is in June. I intend to remain in post until end of July 2023. My pension is in the final salary scheme as I started in 2000. Would it benefit me to take out my pension before April 2022 or to leave it where it is until my final year and if so, please can you explain why? Any advice will be greatly appreciated. Thanks.
Remember that I am not a financial adviser - the unions do have deals with companies and it may be worth getting one of them in as well as listening to my opinions. If you are certain that your final salary isn't going to go up by more than inflation after March 2022 then the final salary part of your pension becomes fixed at that point in time (unless your "final salary" is dropping - something that could well happen if you have been on the same salary scale for 10+ years...you can check this on your statement, if Method B is your best and the years used in method B are from 10 years ago then that is indeed quite likely!). If you are full-time then you need to look at what will be your 'salary of reference' (the highest salary used in working out your final average salary)...your pension can pay out the gap between your current salary and that figure if you opted out. If you don't opt out then you don't get paid that money and it isn't put aside for later...it just doesn't get paid - that is the reason for considering opting out and starting the FS pension. If you are part-time then there is a bigger 'gap' that your pension can pay! If you opt out in April 2022 then by the time you finish in August 2023 you will have added 1.4 more years in the career average scheme - the scheme you would be in after April anyway...and as that is more than 1 full year it qualifies you for more pension. This is the advantage of not waiting until the final year. If you did wait until April 2023 then your pension can fill a much larger gap because it is based on the financial year.
Hi David, thanks for all that you do to help teachers through this complicated process. I've just followed the link on the Facebook page to this video, as I'm pretty sure it applies to my circumstances. One quick question, if I may? My birthday falls towards the end of April, so when would be the best date to opt out? Hope you can help, thanks in advance.
Interesting question. It will depend on your figures but I suspect opting out of May (by sending in the form during April) might be best. This would trigger your pension on 1 May, after you have reached your normal pension age for the scheme. If you were to opt out of April then you miss out on two aspects of the scheme and gain only a few days pension (compared to gaining a whole month that would happen if your birthday was 1 April). Aspect 1 - you add another month to the CA scheme (April). Aspect 2 - your existing CA pension will get the 1.6% bonus that is added on top of inflation that is only paid if you are "in" the scheme after 8 April.
@dfountain Thank you so much for your prompt reply! This (along with the Facebook page and your UA-cam videos) has really helped me get my head around things. Your help is much appreciated.
Many thanks for the advice.
You are welcome but I still recommend getting a proper IFA in to talk through the options before you make any final decisions.
@@dfountain I’ve got an appointment with an advisor next week. Thanks.
On further reflection after watching more of your brilliant videos, it seems I would be best to opt out at 59 years and 11 months and thereby avoid the abatement trap altogether.
I will also take independent advice, but it sounds like a sensible option.
Yes, the tricky part with this is that you cannot simply "opt out", you need to have a break in employment. Most schools will happily arrange a day's break to allow them to keep an experienced member of staff but...it does depend on the school...and you have to arrange this ending of one contract, having a period of unemployment, and then re-employment so that your pension is applied for in plenty of time to have it start during that break.
Hi David thanks for this video can i just check with you. I am turning 60 this April and am planning to stay in teaching for another year. So should i opt out fro. April 2025... but leave at the end of August? Thank you
It's probably too late to take your pension before 60 as that would require getting your school to agree to a break in employment, but that would let you get your pension on top of your salary with no restrictions.
If you are working part-time then your NPA60 pension could be taken from THIS April and see it top up your salary (subject to the rules on abatement).
You should probably also check if you need to "lock in" your best years BEFORE the end of February otherwise your FS pension may lose value by next April.
Only by checking your Salary of Reference can determine WHEN might be the best date as to when to take the FS pension.
Hello David,
I am in the tapered pension scheme. I am 60 in November this year. I work full time and I am UPS3. Currently I need my income.
From looking at your videos and other research I have done, this is the plan I am considering: In November when I turn 60 I will take my final salary pension. Because of abatement, I will ask my employer if I can reduce my days to 4 days in stead of 5 days as my final salary pension is approximately £8000 per year which is approx the equivalent of a days pay. I will continue working four days a week and continue to contribute to the career average scheme. Am I missing anything? Do I need to reduce my working week as I've suggested by a day? Do I need to finish employment for 24 hours and then start on a new contract?
Are there other options linked to the McCloud judgement that I should be considering.
Thank you so much for your help. It seems impossible to find anyone to talk to who really understands this. I have also sent you a message on your blog with a slightly different question that I also needed some clarity on.
Oh there's a few aspect to this that we may need to consider.
Firstly, whilst you ARE a tapered member this is something that is being cancelled by the McCloud judgement. Your transition date as shown on your statement is NOT going to be one that you can choose. The only choices will be to transition from final salary to career average on either 1 April 2015 or 1 April 2022. This is likely to see you increase your final salary pension (most teachers are better off doing it this way - but to be sure I would need to see your employment history).
If you wait (big if here) until you are 60 before taking your pension then you do not need to have a break in employment but as you note it brings into play the issues around abatement and limits on how much the pension can pay whilst you are still working.
If you were to take the pension BEFORE 60 then you would have to take both pensions at the same time BUT it removes the problem of abatement. You could then continue to work 5 days rather than 4 if you wished. However in order to do this you would need to be unemployed, or at least not employed in a TPS eligible post, ON the day you start your pension.
@@dfountain You're videos have certainly been helpful, but I feel as if I'm going round in circles. I'm thinking of doing similar to Carolyn, I'm 60, but reducing 2 days and only working 3 from September. I too feel that it's impossible to get any advice and it seems to be a minefield of potential problems. Planning on just taking my Final Salary Pension, but will this change each year?
Hi David ...I was 60 in February and following your advice I opted out for MArch. I now need to apply to take my pension but am stumped by some of the form. I will be going to take 0.6 next year, again following your advice in terms of abatement and so on. I am also confused as to whether I should tick the Career Average (NPA equal to State Pension Age) in addition to ticking the Final Salary (NPA 60) part on the form. What on earth is the Lifetime Allowance - do I tick that or not? #Confused
Going to 0.6 means you are unlikely to hit the abatement limit, but NOT taking the CA pension at this time would also reduce the chances of doing that. As for the LTA, you only need to worry about that, I think, if your pension is over £35k
In the section from 10mins in - I'm seeing potential errors in the calculation? Can I check with you: (1) 1250 per month divided by 60 per month = 21 months not years (less than 2 years >>69 yrs old) (2) If it was taken from April, then it should be 5x1250 =6250 /60 = 104 months = 8.6 years (from age 67) >> 75 years old. Am I missing something here? thanks
Yes, a year working at £40k adds £700 to the ANNUAL pension. This means that each month is adding 1/12th of £700, so about £60. Work a month and the ANNUAL pension goes up £60.
@@dfountain Thanks. I see. My current Career Average Scheme (Apr22-Sep24) has a current value for an Annual Pension of around £1400 (payable from 67). Does that CA pension vanish if Entitlement Day opted for? or does it remain roughly as it is? or how should I factor that into the calculation?
And does it make any difference if part time contract (0.66)?
Hi David. Thank you so much for your videos. I am learning so much, but at times feeling overwhelmed by the amount of information.
I will turn 60 in August 2024 and am thinking of retiring at Christmas 2024 but still working full time up until then. I started teaching in 1988. Is there any benefit to me opting out of the FS the day after I turn 60? Thanks
Yes, but you'll need to do the maths to work out if having 4 extra months worth of FS pension outweighs the amount added to the CA pension for those months (in most cases it will and for someone with 34 years service in the FS scheme that is most likely)
Opting out in July will start your FS pension ON your 60th birthday, though if your birthday is towards the back end of August then you may consider opting out DURING August and your pension then starts on 1 September.
You are unlikely to be in trouble with abatement and your FS pension will be less than half your salary and despite being paid for around 8 months you will have 4 months of that financial year without a salary.
@@dfountain Thank you David. My birthday is after the 16th so is that the back end? Is opting out at 60 also the trigger for receiving my lump sum and pension monthly or is that a seperate form I fill out for retirement? If it is a seperate form, how long before I fill that out please?
Hi David, I
I am 62 and considering going part time for 2 days a week in September. I want to access my full pension then as an enhanced lump sum plus reduced monthly sum I am a UPS 3 teacher on about £45,000 per year. I believe I have to organise this with my head teacher who has to be in agreement. I start a new contract with a 1 day break in service if agreed but was considering opting out of the pension for that new contract if it benefits me financially as suggested in your video. What would be your suggestion?
As you are already OVER 60 then if you were teaching before 2007 you can access your final salary pension NOW and WITHOUT taking a one day break in your employment - in other words you can remove the requirement to get the agreement with your Head entirely...they do not need to be involved in the process. Of course, you will be subject to the rules on abatement if you take your NPA60 pension in full, but if you are dropping to 0.4 this is very unlikely to result in any pausing of the pension since your pension would have to be worth well over half your current salary before it reached the limit.
I would get in touch, and let me work on your actual figures so we can see how much you can get simply by opting out for a month. In this regard the sooner the better since it may even be worth getting a month's worth of pension paid out in THIS financial year, before April 2023.
Hi David, if I only pay into the career average scheme from April to August because I have taken my FS pension like in the video - will I get back those career average payments since I have not paid in for a full year for it to count towards a pension? Thanks
This is an area over which there is some uncertainty.
The TPS website says that this service can be taken as an "annuity", this is a lower valued pension.
However, I was told by someone from the TPS that it would be possible to transfer this service into a private pension - much better value, but I have yet to hear from anyone who has done this.
Hi David
Thank you for this very informative video. I am 60 in August 2025. I have been a teacher since 1988! I've always worked part time. I have about 21 years full time equivalent service. I always planned to keep paying my pension beyond 60 to add more years of service. Is this silly? Is it better to take my pension at 60 and continue working and paying into the other pension scheme ( retirement at 67)?. Best wishes
Sean
Silly, no, but it may not be the best option and you are missing one key factor.
The NPA60 pension scheme can no longer add any years...the last day for that was 31 March 2022.
Everything from 1 April 2022 onwards is now in the career average scheme.
The problem for you is that the NPA60 pension gets NO enhancement for being left later than 60 - unlike the 3%-4% reduction that is applied for every year you take it "early" there is NOTHING added if you take it late. Given that you cannot add any more service to it either then the only reasons not to take it at 60 are:
1) You are climbing a promotion ladder and your final salary is going to increase - unlikely given that most teachers have had over a decade of below inflation pay rises and most have their best calculation from using salaries at the maximum of 10 years ago!
2) You've decided to take it early and avoid the abatement issue!
(Remember these are my opinions and I am not a financial adviser)
If you take the pension AT 60, then you run into a limitation on how much the pension is allowed to add to your salary (see my video on abatement).
Take the pensions BEFORE you reach 60 and there are no limits.
You can continue in the pension scheme after taking the pension, though you have to work at least 1 year for it to "qualify".
Thanks so much for that. I'm going to try and process this!
Hi David
I work and have for many years part time .7 on UPS3.
Is the Abatement issue based on full time salary?
My highest three years salary on my statement is very near the bottom of my statement.
From your information I am thinking I should miss a month of pension contributions to prevent these figures dropping off the bottom!
I'm understanding that when I continue working after 60 I must ensure my pension plus salary is below the salary of reference.
I think you are suggesting I consider taking my pension a few months early to avoid Abatement completely?
Thank you
Sean
On your website, there is a comment about Entitlement day and how you have to have a break in employment if you want to retire early - does this mean that you need to resign the month before you claim it early?
It means you need to negotiate a break in employment and give yourself enough time to have applied for the pension in time for it be started on the day you are not employed as a teacher.
You can unilaterally resign in line with the conditions of your contract, which for teachers in England and Wales means giving at least 2 months notice to leave on 31 December or 30 April and 3 months notice to leave on 31 August. Then arrange any new contract to start on a date after you have set up as the start of your pension. However, most teachers will talk to their HT and arrange for a break in contract of just a single day. Leaving on 31 August but starting their new contract on 2 September allowing them to have their pension begin on 1 September. The TPS want a minimum of 6 weeks notice in any application for the pension.
@@dfountain So if you aren't taking another contract, your break is just resigning normally and instead of going back, you just get your pension from 1st Sept?
@@BodegroesYes, you still need to apply for the pension, it isn't paid until you make the claim.
Hi David. What happens if a person has reached their NPA and wants to take their pension but has, at that point, paid into the career average for < 12 months (and during those months has opted in/out a few days to prevent their best of 3 calculation decreasing). Do they need to work longer than planned to meet the 12 month rule for entitlement to benefits from CA scheme?
This is an interesting question and one to which there is a bit of a black hole in the legislation. I believe it has been referred to in Parliamentary discussions under the heading of "The Pensions trap".
The problem surrounds the period of time after they take their NPA60 (or 65) pension. Normally this would be called "additional service after retirement" and the response I have had from TPS is that this service would need to be a minimum of a further 12 months (365 days). The CA service built up from before the person took their NPA60 pension wouldn't need such a minimum amount because the regulations for this part DO allow the service time from before they were moved into the CA scheme to be included.
For example, a teacher reaches 60 this year and works through to their retirement at the end of August. They take their NPA60 pension but leave their CA pension untouched. Their CA pension from April to August is 5 months. They then take up a new post and pay into the scheme from October. From what I have been told (and only at the lowest levels have I had this conversation!) their 5 months of April to August would qualify for a pension BUT would not contribute to the minimum period of 12 months needed for their October onwards service to count! Hence the term "trap". We are awaiting more details from the scheme on how this will, if at all, be addressed.
@@dfountain thanks for your time on this David. I'll keep my eye on TP website. Re an earlier conversation on the best 3 years and opting in/out. I applied to opt out and then in again a few days later. Haven't heard (yet) that this is a problem. It might be of interest to other readers.
'Opting' out of the TPS has to be done in whole months whilst you are in a regular contract. Of course it is possible to have just a single day's break in service if your contract with a school can end and then following a short break a new contract started.
To put this into context though do consider the amount "lost" or "sacrificed" by missing out on a month is relatively small.
For example a UPS3 salary is £41,604. One month of that salary is £3,467.
One 57th of that (the amount added to the annual career average pension) is £60.82 - based on you taking that at the state pension age (67 or 68). Take it earlier and it's a lot less.
In this example if the teacher was on a 0.5 contract then the sacrifice is half that of course.
It strikes me that anyone who is on a zero hours contract might be well served in opting out each August (or September if that is when they are paid for the work done in August) when they have NO income!
@@dfountain Hi David ... I'm not on HP contracts at present but a full time role in college. Fyi - will let you know if the few days opt in/out application goes through ok.
I am 63 years of age; my birthday is in June. I intend to remain in post until end of July 2023. My pension is in the final salary scheme as I started in 2000. Would it benefit me to take out my pension before April 2022 or to leave it where it is until my final year and if so, please can you explain why? Any advice will be greatly appreciated. Thanks.
Remember that I am not a financial adviser - the unions do have deals with companies and it may be worth getting one of them in as well as listening to my opinions.
If you are certain that your final salary isn't going to go up by more than inflation after March 2022 then the final salary part of your pension becomes fixed at that point in time (unless your "final salary" is dropping - something that could well happen if you have been on the same salary scale for 10+ years...you can check this on your statement, if Method B is your best and the years used in method B are from 10 years ago then that is indeed quite likely!).
If you are full-time then you need to look at what will be your 'salary of reference' (the highest salary used in working out your final average salary)...your pension can pay out the gap between your current salary and that figure if you opted out. If you don't opt out then you don't get paid that money and it isn't put aside for later...it just doesn't get paid - that is the reason for considering opting out and starting the FS pension.
If you are part-time then there is a bigger 'gap' that your pension can pay!
If you opt out in April 2022 then by the time you finish in August 2023 you will have added 1.4 more years in the career average scheme - the scheme you would be in after April anyway...and as that is more than 1 full year it qualifies you for more pension. This is the advantage of not waiting until the final year.
If you did wait until April 2023 then your pension can fill a much larger gap because it is based on the financial year.