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Resigning then retiring

Discussion in 'Retirement' started by trolley1, Oct 27, 2019.

  1. trolley1

    trolley1 New commenter

    Evening. wonder if someone can help. Have found a dream job working part time - not even applied for it yet as uncertain about a few things.
    I'm currently teaching in Scotland, over 55 so could go for early retirement. NPA is 60 so should get lump sum and pension. Member of SSPA.
    In an ideal world, I would go for early retirement then find a part time job but this has got me thinking. If I were lucky enough to land a new job and therefore resign from teaching, would I be able to get early retirement lump sum and pension or would I have to wait until I was 60? How would I go about retiring if no longer in a teaching position? Would my pension be capped if I were earning money
    even if not in a teaching position?
    Have looked on websites but unsure of information.
    Thanks to anyone who can shed a bit of light on this.
  2. diddydave

    diddydave Established commenter

    I don't think the Scottish scheme differs greatly from the English one in these respects but as ever it may be worth getting some expert advice rather then relying on comments given here.

    That said, from my understanding, this is what I have seen in the English scheme:
    1) If you take 'early' benefits i.e. before you are 60 then there is no cap on earnings. (Some deliberately take it 1 day early to prevent the cap being an issue)
    2) Only teaching positions, those that allow you to be part of the teacher's pension, can result in your pension being stopped if you take it at 60, or later. Any other employment doesn't affect your pension payments.

    Bear in mind that whilst the lump sum is tax-free your annual pension will be taxed, so if it and your new job go over the tax threshold some of it will be taxed.

    It's worth doing your own calculations, many have found that taking it early means they are better off in the early years of retirement and don't start losing out until they are in their late 70s - by which time the state pension will kick in.

    It may be worth looking at buying additional pension whilst you are still in the scheme and can do so. Bearing in mind you will shortly have a lump sum that can replace any savings spent doing this.
    Dorsetdreams likes this.
  3. trolley1

    trolley1 New commenter

    Thanks for such a quick reply. Can I ask what you think about me applying for early benefits once I have resigned form my post. Would I have to wait until I was 60 before they paid anything out?
  4. diddydave

    diddydave Established commenter

    You don't have to wait. My wife stopped teaching and claimed a year later, at 56, it was paid on the date she picked. The English site had an online form to fill in and that was it. The TPS has an online statement which includes your service history, if the Scottish one has the same then I suggest you check it is accurate.

    The process is very simple but only you can work out if it is the best for you.

    The ARB factors for her scheme (all of her service was in the final (80ths) salary scheme) were quite easy to find but I don't know if yours are any different.
    @ 55 you get 81.1% of the full amount
    @ 56 it's 84.5%
    @ 57 it's 88.0%
    @ 58 it's 91.8%
    @ 59 it's 95.9%
    'Losing' ~20% sounds quite severe but because you are receiving them for 5 more years you don't get to the point where you are worse off until you are in your late 70s (according to my calculations).
    suzuki1690 and eljefeb90 like this.
  5. eljefeb90

    eljefeb90 Senior commenter

    Great advice and number crunching from @diddydave ,although he obviously lacks the concrete figures that only you know. From everything I have read on this forum and on the TPS website, looking at the figures when taking your pension early is fairly easy. The figures will be on the SSPA website for your final pension at 60. If you leave at 57, as I did, your pension is reduced by 12%. To work out at what age you start to 'miss out', you add up your three years of extra pension and then subtract the 12% deductions.
    Over simplifying it a bit (because I don't take tax ,inflation increases into account), if your pension at 60 will be £18000 a year, leaving at 57, means you will miss out by £2160. The first question is whether you can afford to live on under £16000 a year (minus tax), just in case you don't get that part time job.
    In any case, the extra three years pension add up to £47520. Dividing this by £2160 comes to 22. So, you start losing out when into your late seventies, by which time you will have been receiving your state pension for over a decade.
    Obviously, losing a full time salary over three years is another factor and is mitigated in your case by picking up a part time salary.
    The main issue will be sequencing your departure. The notice period in teaching is usually half a term and it takes about that long, or longer, for your pension to be sorted out.Then, there's the dream job.How long will that be available for?
    From what you say, once you've done the sums and they seem to work out, it sounds ideal . Good luck!
  6. catmother

    catmother Star commenter

    Not in Scotland. It's just 4 weeks from the time you resign,at any time of the year you want.
    suzuki1690 likes this.
  7. eljefeb90

    eljefeb90 Senior commenter

    Scotland is fast becoming the new Sweden!
  8. heldon

    heldon Occasional commenter

    Not really we have bagpipes!

    It is a fantastic country to live in though. Great mountains, beaches, forrests and outside the central belt little traffic.

    On the east it doesn't rain much and on a bonnie day the west is great to visit.

    I widnae live anywhere else !
  9. eljefeb90

    eljefeb90 Senior commenter

    Oh I agree, mostly. Personally not too keen on the west Highland midge and plain bread, but Williams Bros. beer and the gobsmacking scenery more than make up for it. And the people, they're a pretty good bunch too.
    No, I meant Sweden in the sense of a utopian yardstick we should aspire to.
  10. catmother

    catmother Star commenter

    Lots of other breads available too!
    eljefeb90 likes this.
  11. trolley1

    trolley1 New commenter

    Thanks to everyone who answered - plain bread is one of my guilty pleasures!!
    For anyone in the know in Scotland, if I were to take early retirement at the end of this current session, would I put the date as end of June or Start of next school year. In other words, would I be able to claim salary through the summer holiday?
    Last question, I promise. SPPA states it can take 4/5 months to sort out pension. Realistically when is the earliest / last date I must inform council / head of my plan to retire?
  12. michaelict1

    michaelict1 New commenter

    not if you are leaving the teaching profession altogether

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