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Phased retirement - how does it work

Discussion in 'Retirement' started by welshsandwich, Feb 28, 2016.

  1. welshsandwich

    welshsandwich New commenter

    Can anyone tell me if this is possible please.
    I want to take 25% of my pension at 60 followed by further 25% each year until I take my last at 63. I assume they will all be tax free. Or do I have to take 50% twice or are none of these possible.
    I basically want to take out ALL my pension pot and pay as little tax as possible.
    None of the examples on any forums seem to explain this process properly.
    I know the implications of more tax etc but somewhere I read that you can 25% each year without paying tax.
    Is any of this actually true.
  2. lizziescat

    lizziescat Star commenter

  3. Guest

    Guest Guest

    What you are proposing is not possible in a defined benefit scheme.
    As far as TPS is concerned you have several choices.
    You can retire fully and take your pension plus tax free lump sum. The lump sum can be maximised (again tax free) You can either retire at 60 without any actuarial reduction or at any age from 55 with actuarial reduction. The size of which depends on when you go.
    Phased retirement works differently. It is do with gradually retiring from teaching in terms of responsibility or going from full-time to part-time. It is not about phasing withdrawal of your pension pot. In our scheme there is no pot as it is unfunded. Todays payers pay todays retirees etc...
    You have a certain tax free lump sum and an annual pension.
    I myself took phased retirement at 55. I took 50% of my pension actuarially reduced and 50% of my then lump sum maximised because it suited my needs. I gave up 20% of my salary as required by giving up my leadership responsibilities. Others reduce my going part time. I continued to work full time as a teacher with less responsibilities. When I finally retire I will claim the other 50% of my pension and lump sum plus the extra years service I will have accrued since 55. Its a very good scheme as my final pension will continue to be based on the best 3 years out of the last ten uprated for inflation. I believe you can do this twice but must not exceed 75% of your total benefits.
    Under the new CARE scheme(which does not apply to me) you can phase your retirement over 3 stages.
    If you joined the scheme after 2007 there is no automatic lump sum (although you can convert some pension if you want) In the CARE scheme there is also no automatic lump sum. (I believe you can also convert some pension if you wish)
    To reiterate there is no pot which you can take completely. It is for you if you are near 60 pension plus lump sum.
    You can retire and return to teaching after a break of one day in service (New contract and pension arrangements). If you have retired early there is no limit to your earnings. If you take age retirement there is a limit based on your salary of reference. With phased retirement there is also no limit I believe.
    I hope this helps and is not too complicated. I am self taught about pensions but have just researched thoroughly on Teachers pensions and other internet resources.
    eljefeb90 likes this.
  4. jacob

    jacob Lead commenter

    What he said.

    You cannot escape the taxman. Remember the old adage "..death and taxes." When you are dead you don't pay tax, but you don't get the pension either. The only way to take all the pot is to retire and live a very long time thereafter.
  5. tudor02

    tudor02 New commenter

    My experience. I am 59 and have taken 75% of my pension including lump sum in September. (some ARB involved but not too much). I am still working at my school but now only 3 days a week. I now earning as much as I used to some years ago when I was a Deputy Head! Lovely! A very long weekend and full pay, in effect. However, If I could I would quit now and may still do so - teaching is not what is was and nor are the students! (! - not supposed to use these so much now) Of course I pay tax etc but still contribute towards a pension.
    sally90 likes this.
  6. Piranha

    Piranha Star commenter

    There is probably some good advice here but, as has been mentioned in other threads, you really need to get advice from experts. Contact TPS to find out what you can and can't do.
    wanet likes this.

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