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Phased retirement question

Discussion in 'Retirement' started by Kalahari, May 9, 2012.

  1. I am thinking about taking phased retirement at the end of this term. I am 61. (Yes, I know, why am I still teaching, but I'm not ready to throw in the towel completely yet.). I am thinking of taking 75% of my pension and then continuing working for 2 days per week. My LA have indicated that this should be possible. My issue that I would be very grateful for information or opinion on is this:
    Say I retired completely (not phased) at the end of August 2012 I would get £x pounds and after two years, for example, it would be £x plus two years' CPI inflation (ie at August 2014).
    If, however, I took my preferred option of 75% phased retirement at the end of August 2012 and then after two years took the rest, ie I retired completely, would my then pension (at August 2014) be equal, or very near equal, to the pension I would have if I had taken the retiring completely option in August 2012 (£x plus two years' CPI inflation).
    In other words, is there any long term financial disadvantage (or even advantage) in taking phased retirement for post 60-year olds. I realise that this is a very technical financial question, involving such things as estimated future CPI inflation rates, but I imagine that there that would be others out there interested interested in the answer.
    Finally, I would also be very interested in any other general opinions about phased retirement.

  2. I assume you have a NPA of 60 and you are not expecting a massive promotion in the next 2 years. If this is the case I can see no reason why you would want to take phased retirement at your age ie over 60.
    The alternative you might consider is full retirement, return for 2days/week if you wish and start a second TPS pension for the extra work (you can get an additional pension now even with only 1 extra days work). You should then get your salary plus full pension as there should not be any abatement of your pension for only 2 days work (you need to check this with your figures!!).
    Your scheme seems to have the major disadvantage that you would lose 25% of your pension for each of the 2 years without any benift. In addition if your full time equivalent salary fails to keep pace with CPI your pension would be slighly less in 2 years time.
  3. Thanks very much for the above reply - very useful and additional food for thought. My main reason for phased retirement is that I would have a guaranteed two days working afterwards and on my existing teacher's pay and conditions level - pro rata. If I retired completely, there is no guarantee that my LA would give me two days work. My manager says she would like to and it should be possible - even probable, but the post would have to go to open advert and although it would be open to job share, who knows what whizzo will apply. So there is risk involved. However, I am a centrally based special need support/advisory teacher in a staff shortage needs area. It's all difficult to judge!
    Incicdentally my most recent pension forecast from TP shows more pension than I expected. It seems not based on the last 365 days, but on previous best years' average, even though I have has no breaks in service and have been continuously employed to date ie as most teachers are. I did not reaslise that previous best years' average would apply to me, or wonder if TP have made a mistake.
  4. The forecast is based on annual returns, they will not know your current salary so its based on the last known reported salary. With the current pay freeze, the best 3 year average adjusted for inflation is likley to be used when the actual calculations are made.
  5. Many thanks for the above. On your last point: I'm not sure how part pensions are worked out, but it seems to me that my remainder 25% pension taken in 2 years time would be based on my best average salary over 3 years in the last 10 (as we are on a near pay freeze), so it should keep up with CPI. In which case my eventual complete pension in 2 years time should not really be less than what it would be if I took it all in August 2012.

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