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"Average Salary" on TPS site higher than what I actually earn

Discussion in 'Retirement' started by scgf, Sep 5, 2015.

  1. scgf

    scgf New commenter

    I'm just about to submit my application for early retirement at Christmas. I will have worked full-time for 37 years and 104 days and will be aged 58 years and 9 months. On the TPS site my average salary for calculation purposes is £48,000 whereas my actual salary (the highest it has been) is £43,812. Is it usual for the average salary on TPS to be higher than your actual salary at retirement? I'm getting nervous because all my calculations are based on this average salary, not my actual finishing salary and it makes quite a difference to what I would get . . . I have used the actuarily reduced calculator, inputting this average salary and would be very happy with the outcome if this is correct.
     
  2. lindenlea

    lindenlea Star commenter

    I've forgotten why but I think it is correct. Wehey!
     
  3. lizziescat

    lizziescat Star commenter

    Average salary is calculated eg on your best 3 years from the last 10 upgraded in line with inflation.

    so a salary of 10,000 say 10 years ago, increased each year in line with inflation will be more than 10,000 with below inflation pay rises.

    Happy retirement
     
  4. geoff1954

    geoff1954 New commenter

    Your figures show just how much teachers' salaries have failed to keep up with inflation. (And the significant rise in pension contributions makes it worse.)
     
  5. scgf

    scgf New commenter

    Cheers guys. SO . . . I can assume that the £48,000 figure is correct and is the one to be applied when using the TPS calculators? If so I will go ahead and hand in my letter of resignation and apply for my pension :) Do I need to give in my resignation letter before applying for the pension? Belt and braces come to mind ;)

    I have spoken to TPS on the phone, but they are not prepared to give me a definitive answer as to what I'd actually receive as a pension - they say to use the calculators on the site and input the average salary quoted. They did confirm my length of service. I was just concerned the the average salary figure was incorrect since it is so much higher than what I actually earn.

    Last minute nerves, lol!
     
  6. old_dobbin

    old_dobbin Occasional commenter

    I handed in my letter of resignation and pension application forms at the same time.Your employer may ask you to prove your date of birth with your passport or other document before submitting the forms to TP.

    Thankfully, the pension is index linked ,albeit to CPI rather than to RPI now, but it's still a very important feature . My pension increased by 18% between 2008 and April this year - yes inflation has been low,but small annual rises add up. You should have a comfortable retirement and when the state pension is paid,it will be even better.
     
  7. applecrumblebumble

    applecrumblebumble Lead commenter

    As you are retiring before normal retirement age just make sure you have filled in the correct form because you are taking your pension early. It will be reduced by about 5% per year so in your case about 6.25% apart from that everything said before is correct. I have applied for mine having made it to 60 and glad to be out it.
     
  8. scgf

    scgf New commenter

    Yes, the calculator says 'Want to retire early? Estimate your adjusted pension benefits' so it is the right one, but thanks for the warning! Yes, I'll be glad to be out of it too! I'm a head of department and we have our personal interviews with the head in a couple of weeks to discuss departmental data for the previous year. Will be a much better meeting than it would otherwise have been! Data is one of the things driving me out! They love it!
     
  9. lizziescat

    lizziescat Star commenter

    I applied a year ago.I felt exactly as you do nowt before you get and had the same dilemma.

    The website clearly stated that the figures were not definite and should not be used to make decision (or some such wording) but as you say you can't get a definite figure until you apply -and ten that will be just before your retirement date (mine was 1 week before) but by then of course you have to have resigned!

    So you have to make a definite decision to retire (and resign) based on a figure on which TPS say you should not make any decision.
    How many decisions such as buying a house or car would we make based on such an estimate? Bizarre isn't it?

    On the positive side I can say that the figure quoted for me turned out to be within c. £20-30 per year, which I think is the common experience.
     
  10. lizziescat

    lizziescat Star commenter

    Now why did that happen?


     
  11. lizziescat

    lizziescat Star commenter

    Try once more

    I applied a year ago.I felt exactly as you do now and had the same dilemma.

    The website clearly stated that the figures were not definite and should not be used to make decision (or some such wording) but as you say you can't get a definite figure until you apply -and then that will be just before your retirement date (mine was 1 week before) but by then of course you have to have resigned!

    So you have to make a definite decision to retire (and resign) based on a figure on which TPS say you should not make any decision.

    How many decisions such as buying a house or car would we make based on such an estimate? Bizarre isn't it?

    On the positive side I can say that the figure quoted for me turned out to be within c. £20-30 per year, which I think is the common experience.
     
  12. scgf

    scgf New commenter

    Thanks, I'm feeling better about it now. I am only able to retire if my lump sum pays off my mortgage - using the average salary and the early retirement calculators it's fine, but if they used my actual salary I would be short. As you say it's a pretty poor show to make one of life's most important decisions based on an estimate!
     
  13. phlogiston

    phlogiston Star commenter

    I'm not sure whether the inflation based career average was a horrible mistake when the coalition decided to crack down on pensions, or a careful calculation to encourage those of us who were feeling old and weary to get out of the way to leave space for the whippersnappers.

    I suspect the latter
     
  14. Peter9999

    Peter9999 New commenter

    My "average salary" was the index linked salary I'd received 8 years before I retired because I'd stepped down and then gone part time. The reason your average is higher than your current salary is due to wage increases over the last few years being below inflation.
     
  15. applecrumblebumble

    applecrumblebumble Lead commenter

    I feel really lucky to be the recipient of the old pensions system and not the career average scheme that has come into being. It will mean that a person holding a post of responsibility will want to stay in post, to maintain their average salary. It will be more difficult to retire early without taking a big financial hit bearing in mind the retirement age will be 67/68 and maybe more and with no lump sum as the norm it makes it difficult to pay off a mortgage without sacrificing a big chunk of your pension. It has been obvious for a long time that the first thing a new academy principal does is look for cost savings by losing those staff in 55+ bracket whilst giving themselves pay rises. And now we have staff shortages!
     

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