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Consequences of exceeding salary of reference

Discussion in 'Retirement' started by Lizzyr123, Nov 11, 2017.

  1. Lizzyr123

    Lizzyr123 New commenter

    Hi I have reached 60 and just got my pension. I have been notified that I can't earn more than £12,000 this financial year without losing pension entitlement.What actually are the penalties? and do the penalties only occur while I am working?
    Many thanks
  2. 50sman

    50sman Senior commenter

    Check with TPS but as far as I am aware the penalties only occur if you are working as a teacher

    The penalties are that your pension is reduced/stopped as you cannot earn more than your salary of reference

    Example. If your salary of reference is 32000 and your pension is 20000 you cannot earn more than 12000 from any teaching job you do
  3. Lizzyr123

    Lizzyr123 New commenter

    Thanks for your reply.
    I was on a one term contract till Christmas in a new school. I decided to take my pension as I would lose my best 3 years service. The school then asked me to stay for the rest of this academic year. I was told if I had a one day break in contract which I did I could carry on working.

    I haven't worked since April this year. I changed authorities and started new job in September. I thought working from Sept to next April wouldn't take me over my salary of reference,then April until August would be a new financial year. I am not sure whether the letter I received means £12,000 from now or whether the limit is for the year. My pension is only £8,000 a year.I am going to be over the limit by about February.

    I thought I would ask you guys as TPS is so difficult to phone after school as it is usually a 50 minute wait. I can't understand their website because it doesn't explain whether they stop your pension just for when you are teaching or whether it affects your pension forever!

    If their website and letters were less confusing they wouldn't have so many phone calls.

    Any help is greatly appreciated.
    Last edited: Nov 11, 2017
  4. Sundaytrekker

    Sundaytrekker Star commenter

    My guess is it’s one year from your retirement date otherwise it would include previous salaries but that is a guess and needs checking. If you go over they will stop your pension and/or ask for repayment. It’s not worth going over.
  5. 50sman

    50sman Senior commenter

    Two things
    1 - a one day break in contract does not work as you have not taken arb - you are retired and have full pension - that is why you have a salary of reference

    2. You will have to check with TP if they calculate their years on financial year, academic years (sep - August) or calendar years (jan-dec) when you find out please let all of us know

    This does not have to be via phone call you could do it by secure message - up to you
    emerald52 likes this.
  6. Sundaytrekker

    Sundaytrekker Star commenter

    I looked this up on my union website. It said the calculations are in financial years. If you retire part way through the year then they use the relevant proportion of the salary of reference. So you can do your sums for this financial year. If you are going to meet your salary of reference by February do you want to lose or pay back two months of pension? But still check directly with TPS.

    The one day break was still needed to access any pension benefits but, as 50sman says, you have not taken arb so a salary of reference applies.
    emerald52 likes this.
  7. Lizzyr123

    Lizzyr123 New commenter

    Thanks Sundaytrekker I will check with TPS. So you think I just lose pension for the months I go over.
  8. Sundaytrekker

    Sundaytrekker Star commenter

    I don’t know how it works for stopping and restarting the pension. Do ask.
  9. Lizzyr123

    Lizzyr123 New commenter

    I have spoken to TPS today.
    You can go over your salary of reference. You need to fill in a certificate of reemployment as does your employer when you start teaching again. Your pension is stopped for the months you are over your limit in that financial year. It then resets and you start again.
    In my case it is worth me forgoing my pension for a couple of months and working full time.It has no detrimental long term effect on your pension.
    Thanks for trying to help Sundaytrekker and 50s man
    PeterQuint and Sundaytrekker like this.
  10. sophrysyne

    sophrysyne New commenter

    TPS has a calculator that tells you how much you can earn a previous poster was correct - salary of reference minus pension = max earnings in any one tax year. I think there is a % inflation or cost of living factor in there too somewhere.
  11. PeterQuint

    PeterQuint Lead commenter

    This is interesting. I always thought that you simply weren't allowed to earn that much, and your pension would stop completely; I suppose I imagined they'd ask for some back - I'm not sure I gave any thought to how it works.

    What you seem to be saying is, if your Salary of Reference is £40,000, and your pension is £20,000, and you start a job, they're not interested until you've earned more than the £20,000 difference. Let's say you're on £2,000 a month, so you'll go over your Salary of Reference after 10 months. In that instance they'll simply stop your pension for the last 2 months of the year, then start again.

    Do I have that right?
  12. 50sman

    50sman Senior commenter

    It only applies to TEACHING jobs
    TP don’t care about your income from an other job
    wanet likes this.
  13. PeterQuint

    PeterQuint Lead commenter

    Yes, I'm aware of that.

    The question remains, is my summary correct, or have I misunderstood?
  14. Sundaytrekker

    Sundaytrekker Star commenter

    It sounds correct in theory but whether TPS have the salary information in time to prevent overpayment is the likely issue.
    PeterQuint likes this.

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