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Early retirement and holiday entitlement

Discussion in 'Retirement' started by makras, Jan 20, 2020.

  1. makras

    makras Occasional commenter

    Hello,

    I am 55 in March, work in Scotland and intend to retire in June 2022 age 57 years 5 months. I am in both NPA 60 and CARE 67.

    Some teachers recommend to retire at the end of August so they can get paid for their holidays. I am not sure about this as I believe that summer holidays are already accrued if you work till end of school year(June). I am confused and would appreciate any help in answering the following:

    - What's the benefit in retiring end of August?
    - Are summer holidays not included in the previous school year(Middle August to end of June)?
    - How is the summer holidays pay worked out when I retire?
    - How much will my pension be reduced and what yearly percentage?
    - I know that final salary pension is calculated as: final salary x years of service / 80. How is the care pension calculated?

    Thank in advance.

    Makras
     
  2. diddydave

    diddydave Established commenter

    I'm afraid my knowledge is mainly relevant to the English scheme so bear in mind what I say may not apply.

    Resigning and taking retirement benefits are separate issues.

    Your annual salary is for 12 months work, that August has no work in the classroom may be irrelevant and if you resign from your post with effect at the end of the Summer Term your school may not have to pay you for the whole year as you have, in effect, only worked 11/12ths of the year. Teaching contracts don't 'accrue' holiday.

    So the main benefit of resigning in August is to make sure you get the full pay you are entitled to.

    With regard to the pensions all of that is up in the air at the moment due to the Firefighters court case and their tribunal isn't going to tell the government what it has to do until July. The preliminary decision is to put existing members back on the final salary scheme as though they'd never been off it. If this is the case then by going in July rather than August you would lose 1 month's worth of service in your pension's calculation. (1 month of final salary = 1/12th of 1/80th of the salary ...so about 0.1%, or £10 per £10,000 of your salary).

    I'd take a look at my other posts on whether it is worth staying in the scheme for these last 8 months though as the 'final salary' for many is going down every month that passes.

    You can take your benefits after the age of 55, the reduction factors are here: https://www.teacherspensions.co.uk/...ement/early-retirement-factors-july-2019.ashx

    Your CARE amount is shown on your benefit statement. Every year your pension increases by an amount equivalent to 1/57th of your salary...and the previous amounts accrued are increased by inflation + 1.6%.

    My notes on retiring are here: https://edividers.co.uk/contemplating-retirement-my-path-and-other-notes#stepwhilstworking
     
    makras and Piranha like this.
  3. Piranha

    Piranha Star commenter

    If it is anything like the English system, you remain employed until whatever date it is agreed that you will leave, which according to the Burgundy Book will be 30 April, 31 August or 31 December. For the latter two, you effectively leave on the last day of term, but you still give the date mentioned above as your day of departure. Technically, according to the Burgundy Book, the final day of term is one of the above dates, but if you actually use those words, there is a risk that the school could say you asked for and were granted an earlier departure day than normal. So, you give notice to leave on 31 August.

    I don't know if Scotland works out to be the same in practice, so that if you give notice to leave the day before the start of the new school year, you will be paid until then. It seems likely to me that it is similar. But, even if not, I can't see the downside of doing this.
     
    makras likes this.
  4. catmother

    catmother Star commenter

    I'm in Scotland too. It's usual to put down the day before the school would go back in August as your last day of official work. That way you will still get paid as normal in July and for some of August.That's the way I did it last year and every body I know has done it too.
     
    makras likes this.
  5. catmother

    catmother Star commenter

    Yes,the dates are different but same principle. You put down that you will be finishing the day before your school would start again in order to get paid but obviously benefit from the holiday as time off like everybody else.
     
    Piranha and makras like this.
  6. makras

    makras Occasional commenter

    Thank you all for the help.

    I discussed retiring at the end of June with the school business manager and he thinks that I’ll be paid for the holidays but advised that I’d better ask HR directly to be certain.

    According to the following points from the SNCT handbook, I should be paid for the holidays if I retire end of school year(June) but I am not sure.

    5.2 How to calculate a Leaver payment for August when employee is leaving at end of academic Session:

    - Annual Rate of Salary / 12 x 50% (This would result in full annual salary being paid in the leave year).

    5.3 How to calculate a Leaver payment when an employee returns at the start of the academic session but leaves before the end of August:

    - For each pupil day and in service/development day worked following the start of the school session, a Leaver payment calculated in paragraph 5.1 is added to end of session payment, set out in 5.2 for a final payment.


    5.5 Permanent Employees retiring or leaving teaching should receive a final payment calculated in paragraph 5.1 with the payment being split between pay to date of leaving (pensionable) and pay in lieu of holidays (non-pensionable). This will ensure correct employee and employer pension deductions are made. If an employee is retiring and has indicated their pension is to start from a certain date but the accrued holidays take them to past that date, pay in lieu of holidays should be paid as opposed to an extension of service.

    http://www.snct.org.uk/wiki/index.php?title=Appendix_2.19

    Any thoughts?
     
  7. catmother

    catmother Star commenter

    Any thoughts? Just what everybody has been telling you and what everyone who has left a teaching job has said they did. I'm not sure what else you want it to be.
     
    makras likes this.
  8. makras

    makras Occasional commenter

    I do understand your point of setting early retirement date to 1 day before school resumes in august. But I'll be moving abroad at the end of June will that be possible? when will my pension be paid?
     
  9. catmother

    catmother Star commenter

    It doesn't matter where you will be. As for the pension,I assume it starts being paid once you stop being officially paid by your LA. However,the pension paperwork is different from your letter of resignation to your school.
     
    makras likes this.
  10. makras

    makras Occasional commenter

    Thanks catmother, that's reassuring. I can wait for the pension payment.

    .

    I intend to give the school and SPPA a year's notice. Could you please elaborate?
     
  11. catmother

    catmother Star commenter

    Assuming that you're in a state school,you tell your HT but also give him/her an official letter of resignation. They will pass on said letter to the council that employs you. The HR people will deal with last pay and sending you your P 45. They also can't start looking for someone to replace you until they have your official resignation in writing.

    However,you need to actively claim your pension to the SPPA,so that's different paperwork.
     
    makras likes this.
  12. makras

    makras Occasional commenter

    I am in a state school and I am looking forward to retiring early in 2 1/2 years. Unfortunately, teaching is no longer enjoyable.

    I really appreciate everyone's help.

    Thank you all very much.

    All the best :)
     
  13. diddydave

    diddydave Established commenter

    From my wife's experience of starting the pension you fill in a form where you put down the date you would like to start claiming benefits, the only stipulation is that you have to be over 55 on that date.

    The lump sum payment is then made on that date (or the day after, I'm not absolutely certain)...then the monthly payments start. The first of these is on the day before your birth day, so if your birthday is 25 October then your monthly payment will always be made on the 24th of the month. The first monthly payment may be less than a month...e.g. if you took the benefits on the 20th of the month then your first pay day is only 4 days later so you get that fraction of the month.
     
    makras likes this.
  14. makras

    makras Occasional commenter

    Thanks diddydave for the extra info.

    SPPA (teacher pension in Scotland) advise to fill in form at least 3 months before retirement date. I turn 57 on 5 March 2022 and plan to fill the form in February 2022. The retirement date will be 14 August 2022(1 day before school starts again) as recommended by catmother.

    Do I have to give the same retirement date to both the employer and SPPA? or can I give the employer 14 August and SPPA 1 September?
     
  15. diddydave

    diddydave Established commenter

    You can give SPPA any date after you finish your employment (in England if you are still employed you have to get your employer's permission).

    By choosing a later date...September, October,...April 2021 etc you can choose the level of reduction that will be applied to your pension...I did a sheet on the effects of this here (Note the AAB factors are for England): https://docs.google.com/spreadsheets/d/1MmQ1h1AwCoC5IggRdVai4L0aBu5j0subZHCkVe3JNOw/edit?usp=sharing

    You can also look at maximising your tax benefits...putting a lump sum into a private pension before you retire can then be taken out again after you retire, if you do this right you can save on tax.
     
    makras likes this.
  16. makras

    makras Occasional commenter

    Having the option to give SPPA any date after I finish employment is good to know.

    I looked at your AAB factors spreadsheet and I'll be worse off when am about 78 if I'll be still alive :( but i'll have my state pension to counter that. So like some of my happily retired colleagues and many on here, I'll take my chances, take what ever I can get now and live my life hopefully stress free and happier.

    I wish you all the best and thanks alot for your help.
     
  17. diddydave

    diddydave Established commenter

    It can feel a little daunting going into a period where you have NO money coming in and you are using up your savings but we set ourselves a clear budget and made it through that period to the point where we planned to take one pension.

    The use of private pensions to make the most of the tax savings and to cover the period between earning and taking the pension is quite satisfying.
     
    makras likes this.
  18. makras

    makras Occasional commenter

    I am already planning ahead and hopefully things will be fine. Indeed, I will be using private pensions. I am realistic and will set a clear affordable budget to take us through.
     
    diddydave likes this.
  19. br0wnsugar

    br0wnsugar Occasional commenter

    Hi DiddyDave,

    Firstly, my concern about the teacher pension is the fact that my one kicks into place when I am 65 and 67 respectively and up to this point yields approx £6k (nearly 9 yrs service) but I also worked for another firm, where the pension I paid into for 14 yrs cannot be deferred and kicks in when I reach 60 in 3 years time, so my question is do I have a limit to how much money I can earn as I plan to still continue working for as long as possible even after the first pension is paid?

    Secondly, is the statement that I have looked at recently the actual pension, barring inflation, up to now or what I would be predicted come NPA, and is it only based on current salary/best of 3 in last years?
    The reason why I ask this question is that I am seriously considering leaving teaching and wanted to know whether me leaving in the summer will affect my final pension figure of approx 6k or is this the actual figure I will receive as of now and not change?

    The pension process etc is far too complex and really once people hit 50+ there should be compulsory PSHE courses offered for the mature person to attend to help prepare them for their non working years; a bit like when a teenager leaves school and has no idea about taxes, pensions, or how to make money work etc as they embark on building a working career.. This country, seems so bad at preparing its citizens to be better informed.......(frustrations).

    Anyway, I digress, so sorry, but DiddyDave, if you are able to give some peripheral non committal advice on my first couple of dilemmas I would be grateful. I also wanted to add that you seem to be the pension guru on this site and offer a service that is so warmly received and appreciated.

    Many thanks
     

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