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Part-time - how is average salary calculated?

Discussion in 'Retirement' started by isaack, May 13, 2019.

  1. isaack

    isaack New commenter

    Apologies if this is a daft question - the whole pension thing is mind boggling!

    I understand that the average salary is calculated by the best 3 consecutive years in the last 10, but is that the same for part-time workers? Is the same time span used? The reason for my question is that as of Sept 18, I reduced my hours to 0.6 after previously working full-time for 20 years. Therefore I am considering the impact on my Final Salary Pension part and what action I may or may not need to take. Therefore, how do I calculate my average salary based on 0.6, is it still best 3 in 10 or is it the equivalent time? Thanks.
  2. diddydave

    diddydave Established commenter

    First thing is to get some advice and do it quickly from an expert. If you are a protected member then you are adding less to your pensionable service (0.6 of 1/80th) and, probably, having to use a lower 'average salary'. If you are any other kind of member then your current service is putting in 1/57th of your salary.

    Your last 10 years is still the last 10 years, so currently it goes back to May 2009 for everyone - full or part time.

    Your best 3 years are, unless you have had a special rise in salary somewhere in the last 10 years, most likely to be the ones from 10, 9 and 8 years ago. The change to 0.6 isn't going to affect this for some time and when it comes to working it out they use the full time equivalent rate anyway.

    From what I have seen the main concern I would say that you have is that your average salary is probably dropping and you are adding in less than 1/80th worth of service to counteract it.

    You can ask TPS for your revalued salaries, I have done a DIY version that you can use but don't rely on it. https://docs.google.com/spreadsheets/d/10x-lKLuc0PXi9C5JftanxmFVVh0PxNYKYEa70xljn38/edit?usp=sharing
    isaack likes this.
  3. phatsals

    phatsals Established commenter

    For p/t it's 3 years in 10 but not 3 calendar years, it's 1095 days. This can cover any length of time depending on how p/t you were.

    As DD has said, it wouldn't affect you for some time, not until 2028. You may, before then, decide to opt out or take your pension, but again you need your figures to work out what's best for you.
  4. isaack

    isaack New commenter

    Thanks. That helps a lot. I should have said that I am a transition member. I am watching my pension, as my Final Salary Pension decreased slightly for the first time last month but my Average Salary Pension covered the shortfall and overall it still increased. Your spreadsheet is really useful. Apologies if this is another daft question but does it take into account part time work. The white boxes where I can enter dates and salary obviously calculate full time/days worked..... although I can see that I can enter my actual service (years and days) in a separate box - I am not that familiar with excel so just wanted to check. Many thanks for the advice and help.
  5. diddydave

    diddydave Established commenter

    Don't forgot though that the career average portion either cannot be taken until 67 or suffers a larger AAB reduction if taken early.
    The spreadsheet only works on Full-time and final salary scheme only - as that is my wife's situation.

    Your service for the final salary scheme is (currently*) fixed as they moved us all to the career average on 1/04/2015 so that is going to move exactly in line with the average salary figure. (If you want to see how the salary figure is changing look down column M, once you get to a figure you can then go down and check how it changes each month thereafter.)

    *Currently as the whole transition membership policy is under review due to the court case against the government that was won.

    Your part-time work has no effect on your final salary scheme EXCEPT that it moves the 10-year goal posts.

    Your career average scheme is getting boosted by 1/57th of your earnings all the time you remain in it. *Currently!
  6. diddydave

    diddydave Established commenter

    As phatsals says it's 1095 days - I believe they work out how many day by comparing your earnings against your full-time equivalent salary, but that should work out the same as 0.6 of a year - so a 0.6 part-timer would need to have their average salary worked out over 5 years.

    In your case as you've only been 0.6 since September 18 you'll go back (in September) 2.4 years prior to Sep 2018.

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