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[Phased retirement] Vs [Actuarially Adjusted Benefits (AAB)]

Discussion in 'Retirement' started by Albeit, May 21, 2015.

  1. I would really appreciate some help on this:

    I am over 55 and am going part-time from September (4 days/week). I intend to draw my pension prematurely, but cannot decide on whether to take AAB. I have read about both on TPS website, asked Wesleyan, rang TPS...etc, but still cannot understand the difference between the two.

    Why would anyone go on Phased and draw just 75%, when you can go on AAB and get access to more than 81%?

    And yet...Phased seems to be the most popular and preferred option.

    What exactly is the difference between the two?

    I have around 20 years of service.

    Sorry if this is a silly question, but I just need to decide and choose the best option.


  2. Dunteachin

    Dunteachin Star commenter

    I don't know. With phased, don't you still have a job to go to?

    Oh, hang on... is AAB different to ARB? I took ARB and just retired.
  3. I think AAB is the new name for the old ARB (Adjusted instead of Reduced).

    From what I can gather (TPS website), with both AAB, you can still do part-time teaching.

    Did you stay on (teaching part-time), or did you leave completely?
  4. Dunteachin

    Dunteachin Star commenter

    I was made redundant at 55, so just decided to call it a day and take my pension. People think that's a bit silly but I've had 5 years' worth of index-linked pension already and, having done the sums, I only start to lose out in my mid-70s. I've also done supply for the last 5 years, which has topped it up nicely. With AAB, you can even get another full-time teaching job, without it affecting your pension.
  5. jacob

    jacob Lead commenter

    With "phased", you get 75% of lump sum and pension. BUT when you carry on working you continue to pay into the pension at the pro-rata contribution rate. Thus when you retire finally you will get more than the remaining 25% as it will have accrued more. Also four days earnings plus 75% pension may give you the equivalent income of full-time, or even more. This is the way I understood it. However, if you just retire your pension is fixed except for annual cost of living rise, but you pay no national insurance. It would also depend though on how many years NI you have paid towards your state pension which I guess you will get at 66.
  6. paulstjohn2014

    paulstjohn2014 Occasional commenter

    Financially for me phased retirement at 55 made sense. I took 50% benefits and lump sum which even with the 20% required cut in salary has not greatly affected by monthly net income. Part of the lump sum was used to pay off some debt so I can really save properly now and plan for full retirement with more financial certainty. As I have said elsewhere on this forum I have not finally decided when that will be.

    With phased retirement you also keep your permanent contract status and do not lose any accrued redundancy entitlement should that happen. If you take early retirement and start a new contract it is like starting again. I also continue to add to my original pension. So when I finally retire I will collect the other 50% plus the extra accrued service years still based on the average of the best 3 years of the last 10 uprated for inflation. For me it was the best way forward.

    Hope this helps.
    eljefeb90 and sally90 like this.
  7. Sally_90

    Sally_90 Occasional commenter

    Ditto @paulstjohn2014 .I took phased two years ago-down to 0.6; I just carried on doing the same job with fewer responsibilities for 3 days a week.I collected a proportion of my pension while earning a salary and continued to pay into and accrue pension benefits which have made a difference now that I've retired completely.There was no break in service.
  8. khib1

    khib1 New commenter

    My husband took phased for the last year of his teaching career which enabled him to take advantage of some 'good' years out of the last 10. Leaving it longer this would have fallen out of the calculation. Also with phased he carried on his job without the one day gap and this maintained benefits he had built up eg sick pay etc.
  9. ambi

    ambi New commenter

    If you take phased retirement and continue working and your salary and pension come to more than your salary of reference do you have to give back the extra to teachers pensions or does that only happen if you fully retire and then carry on with a teaching post? I am a bit confused about this. And also how do they calculate the amounts- from Sept to August/ April to April or from January to December? Has anyone been in this position and could enlighten me please?
  10. Sundaytrekker

    Sundaytrekker Star commenter

    You are allowed to take up to 75% of your pension as long as you reduce your income by at least 20%. As long as you do this, I don’t think the other calculation is brought into the equation as you haven’t fully retired. But please check.

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