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Discussion in 'Retirement' started by Seffie, Aug 23, 2020.

  1. Seffie

    Seffie New commenter

    I admit to being completely confused ‍♀️

    I had planned to either retire or start a phased retirement August or maybe the December 2022, when I will be 63 years old. ( I had a more than 10% increase, so in April 2022 I will be out of the three years trap).

    My NPA is 60, I’m Final salary and am currently earning more than I ever have. I enjoy my job, but Covid has made me re-evaluate my lifestyle, working 12 hour days, the constant stressful situations to be dealt with etc. is not something I want to continue for much longer!

    Unfortunately my other half is likely to be made redundant soon and for his health I’d like to see him retire, however he has barely any pension and is a couple of years away from state pension. So I will need to still work for a couple of years until he is 66.

    I was late to teaching, so will only have a pension of around £13,000, then after three years my state pension too. I know I can live off my teachers and state pension at 66, in fact quite comfortably I think? My worry are the years in between! However I could use my lump sum to boost my teachers pension until I reach 66 ( although would have liked to keep that as a rainy day fund).

    I have a couple of questions, what will April 2022 mean to me, will I keep my final salary pension and then anything after goes in new scheme or do I lose Final salary and it all goes in to the new scheme? Does this mean I should retire before April 2022 to lock in my final salary pension or at least start Phased retirement?

    I have no mortgage but do have a small loan for a home improvement, that will be paid off in 2022.

    I could really do with some help please to make sense of it all and come up with a plan. So, what would you do?

    Appreciate any guidance you can give.
  2. diddydave

    diddydave Lead commenter

    So long as you were teaching prior to 2012 you will be able to choose, for the period 2015-2022, whether your pension is treated as being in Final Salary or Career Average. Good news is that you won't have to decide on this until 2022 at the earliest - so plenty of time to see which is the best.

    Whilst the vast majority will be better off choosing the Final Salary scheme for that period you should do the calculations to check which is better for you.

    Your service that is in the Final salary scheme is not lost and is not moved into the Career Average scheme at any time. Any service after April 2022 will be in the Career Average scheme. When you take your pension there will be two parts. The FS amount and the CA amount. As you are over 60 already you will not have to take the CA pension at the same time as the FS one. (Though it is probably going to be a very small amount given that it is likely to be only the period from April 2022 to August 2022 that will be put into it!)

    You do not need to retire before April 2022. You say that you are earning more than you have ever done but I'd still suggest that you check your benefit statement on teacherspensions.co.uk to make sure that your best 'final salary' isn't the method B from 2010-2012! If it is then come back and ask again. Your 'best' final salary sounds as though it is the most recent 3 years so they are used even if you didn't retire until 2027 - no need to lock them in unless you intend teaching beyond that date...and you don't need to act on that until 2027.

    To start phased retirement you do need to take on a new role with a minimum of a 20% pay cut - but a word of warning here, I'm not sure that as you are already over 60 that it won't be abated.
  3. Seffie

    Seffie New commenter

    Thank you for taking the time to respond, it has helped.

    I hadn’t realised that to take phased retirement I would need to be in a new role, I thought I could stay in my role but just decrease my days to say two or three a week, which my HT would support.

    Re the Abatement, how or can I, avoid this?

    So with my circumstances what would you consider to be the best plan?

    It all seems so complicated that it makes my head swim!
  4. diddydave

    diddydave Lead commenter

    My mistake, a new role isn't needed but the 20% drop in salary is
  5. diddydave

    diddydave Lead commenter

    Unfortunately you've missed the best way to avoid abatement...that is to take the pension before 60...though as you say if your salary has increased significantly over the last 3 years that may not have been the best option.

    There is no way to avoid abatement once you are over 60. However, if you are going down to 2 days a week it is very unlikely that it will affect you. Your salary of reference (the figure you cannot go over in combining salary and pension) is going to be around about what you are earning now. £13k from your pension + your 2 days a week salary shouldn't go over it so you won't have to worry about abatement.

    You could take your FS pension in full at the time you move down to 2 days as you are already over the NPA. This would mean any service after that time will be put into the CA scheme. It does mean you won't have those days added to your FS scheme but I don't think there will be much difference (but DO get the numbers actually checked to see what the difference IS).

    If you want me to have a more in-depth look I'd need to have a look at your service history, i.e. your benefit statement.
    Seffie likes this.
  6. Seffie

    Seffie New commenter

    Thank you. I hadn’t considered taking all my pension, can I do this and remain in post but drop a few days a week?

    It’s been a really difficult first week back, so this has been on my mind a lot.
  7. diddydave

    diddydave Lead commenter

    You will need to get confirmation from TPS as to the technical details.

    I believe that you can simply opt-out of the pension scheme whilst remaining employed to claim your pension once you are over 60.

    I would also say that you should get your numbers checked.
    See what the effect would be of taking your pension soon compared to waiting until April 2022.
    You say that you've had a >10% increase but there is also an annual allowance which if often higher than 10%...for the last 3 years it has been around £6000: https://www.teacherspensions.co.uk/members/resources/forms/updates.aspx (see the section headed 'Restricted Salary Provision – Final Salary')

    As well as the restricted salary you'd also miss out on the years of service that would be added to the calculation between the date you take it and April 2022. There is no enhancement for taking the pension later than 60.
    Seffie likes this.

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