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Annual Benefit Statement - Average Salary

Discussion in 'Retirement' started by raggedstaff, Nov 30, 2015.

  1. raggedstaff

    raggedstaff New commenter

    Afternoon all.

    The Average Salary listed on my Annual Benefit Statement is a lot higher than I would have expected it to be. Could anyone say why? Am I missing something obvious?

    Also (wishful thinking), would this be the value that they use to calculate benefits? So, could I put that figure into the TPS Calculators to get some idea of what I might get when I can at last finally call it a day and get some life back?

    Cheers all.
  2. suzuki1690

    suzuki1690 New commenter

    I am in Scotland so it might be a bit different. However I just asked the SPPA for a forecast for going 'now' and I was given a figure for £3000 more than I earn at the moment. Basically as we have not had inflationary pay rises or any pay rise for years our pensionable salary is based on the best 3 out of the last 10 years increased for inflation or the last salary whichever is the highest - the inflation in the last 10 years has increased my pensionable pay to be £3,000 more than my latest salary! Lots of threads on this site saying the same, that is why I checked it out and asked for a forecast. I have never had a promoted post so the extra £3,000 can only come from the lack of pay rises and the inflation figures in the intervening years.
  3. lizziescat

    lizziescat Star commenter

    Yes it's the inflation rises from your best 3 out of the last 10 years which give you the 'higher than expected' figure. So you can use this to calculate your estimated pension. But note that if you had a larger salary say 9 or 10 years ago and your pay has since dropped then this higher salary will drop out of the range for the purposes of calculations.
  4. wanet

    wanet Star commenter

    The above is very valid. I was surprised how much more I got when I retired. Anyone who has had a drop in salary could easily loose out if they leave it too late to retire. I wonder if everyone realises this.
  5. mrkeys

    mrkeys Occasional commenter

    The best thing Lord Adonis did for teachers was this change in pensions to best 3 in last 10, index linked.
    HelenREMfan likes this.
  6. applecrumblebumble

    applecrumblebumble Lead commenter

    Best thing ever Adonis! Just got my lump sum and it was spot on with the calculation from the average figure on my statement and on top of that I bought in some additional pension in 2008, all index linked (originally rpi) to cpi so a nice surprise. None of that AVC nonsense from the 80s.
    It does show you how much teachers salaries have fallen behind in real terms (about 13%). I'm glad to be retiring now.
  7. mrkeys

    mrkeys Occasional commenter

    I should add that the change Lord Adonis only lasts for a few more years and then it changes again to average salary. So sorry for teachers still a few years away from retirement. Seems the 'golden pension' will be no more.
  8. FrankWolley

    FrankWolley Star commenter

    Only thing?
  9. HelenREMfan

    HelenREMfan Star commenter

    My younger worked with Adonis and was highly appreciative of his intellect and the fact that he is a very decent man. Tis a great shame he left the DFE
  10. catmother

    catmother Star commenter

    Do you know when it changes?
  11. heldon

    heldon Occasional commenter

    With inflation falling the advantage will be in to drop out. However don't think there is a timescale on th 1/80th scheme arrangements. Certainly haven't read that anywhere?
  12. ukpaul

    ukpaul Occasional commenter

    TPS gave me advice for retiring in seven years time that it will be the best three years in the last ten. are you saying that they got it wrong? If so then there's a big problem, as I've acted on their advice.

    As per their website - "The average salary is used to calculate your final salary benefits when you retire. It’s calculated using the better of:
    • The average of your best consecutive three years re-valued salaries in your last ten calendar years or,
    • Your last recorded 12 months of pensionable service before your retirement."
  13. lizziescat

    lizziescat Star commenter

    I think (but never believe what anyone on here says - check with TPS -again!) that there is confusion between the outgoing and new schemes.

    The outgoing scheme -the best 3 of the last consecutive 10 years will stop but your benefits up to that point will remain the same. After that you will (if still teaching) begin a new pension scheme based on career average in your case it will be the average salary of the last e.g. 7 years (which unless you take a salary cut ) should still be a pretty good scheme.
    This is my understanding but, having retired, I'm not full up-to-date with the changes.
    Ring TPS and check. Your union will probably also have some information
    Rott Weiler likes this.
  14. lizziescat

    lizziescat Star commenter

    I always thought the thinking behind the 10 years rule was to allow flexibility e.g. people stepping down for the last few years would not 'lose out' regarding their pension, (a sort of mini 'career average' scheme) thus avoiding people on high salaries in positions of responsibility hanging on for dear life to preserve their pension.

    The career average scheme is still a good scheme and is just as, or more flexible, (and possibly benefits women more than the old scheme). Some one who attains HoD/SLT/HT early to mid career will not lose that pension advantage if they wish to step down whilst having young children or because, later in life, they can live on a lower income or just (heaven forbid) they just want to teach'
    Rott Weiler likes this.
  15. Rott Weiler

    Rott Weiler Star commenter Forum guide

    I know little about the TPS so don't take my advice on it, but what lizziescat says it what happened in the private sector schemes I am in. Generally speaking schemes can't make changes retroactive, ie they can't change the rules for years of service you've already accrued. Only for future years of service. So if half way through a 40 year career with the same employer they change it from final salary to career average salary your pension for your first 20 years stays on final salary basis and the next 20 years is calculated on career average (presumably the average during that 20 year period).

    So to calculate your pension at retirement two separate calculations are done, one the first 20 years and one for the second 20 years, and the two sums added together as your actual pension payment on retirement.
  16. mrkeys

    mrkeys Occasional commenter

    No I do not know the actual dates but understood it to be a sliding scale, so some of the pension is at old scheme and some at new.
  17. lizziescat

    lizziescat Star commenter

    I thought it had already changed April 2015?

    I don't know what you mean by 'sliding scale' . It's a straight forward change.

    On date XXX you stop paying in to (and accruing benefits under) the old final salary scheme (benefits locked at that point)
    on date XXX + 1 you pay into new career average pension scheme and begin to accrue benefits under these rules)

    Thus when you retire you will have 2 pensions a 'final salary' one and a 'career average' one -each based on however many years you did under each of the two systems.

    (NB there are some teachers who may have 3 different pensions based on the 2 final salary schemes + one based on the new career average)
    Last edited: Dec 2, 2015
  18. lizziescat

    lizziescat Star commenter

    One key aspect of the new pension scheme is that the retirement age is set at State Pension age (and presumably will rise with that). Taking the career average pension early (e.g. at the retirement age of your earlier pensions e.g. 60 or 65 will incur reductions in benefits)

    The TPS website has lots of information about this and calculators which I think could help you to understand how it will affect you as an individual.

    Did you not attend the meetings held, or read the information sent out by the unions over the last couple of years?
  19. lizziescat

    lizziescat Star commenter

    Entry to the 1/80th scheme ended around 2007? ish

    1/80th scheme closed/ will close when the career average was/will be introduced April 2015?
  20. aspen_1

    aspen_1 New commenter

    For those nearer to retirement age there will be 'tapering' to smooth the impact of the changes.
    lizziescat likes this.

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