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Working after retirement

Discussion in 'Retirement' started by JanE60, Jun 4, 2020.

  1. JanE60

    JanE60 New commenter

    Now Covid has stopped my travel plans, I am considering teaching again - a temporary one-year contract. I am due to receive my TP in November. I know I can earn a certain amount (salary of reference minus my annual pension) without the pension being affected. However, the job would take me above this amount. So, HOW would pension be affected? Would I have to delay taking it? Could I still have my lump sum? Anyone have any experience/knowledge which might help my decision?
  2. diddydave

    diddydave Established commenter

    Are you over 60?
  3. diddydave

    diddydave Established commenter

    You may need to get more detail from the TPS directly - they are good at answering factual questions on the procedure, just so long as you don't ask them for advice.

    My reading, and I have had some conflicting communications, leads me to these points:

    1) If you take your pension before you are 60 then there are no limits on what you can earn. So your pension is not 'abated' - I'm very confident that this is the case.

    2) If you take your pension at your normal pension age (60) or later then the limits you refer to to do apply. I've had conflicting messages on what this means. The two conflicting claims are as to what 'abatement' means. Two options that I have heard are:
    a) Then ALL of your pension is stopped - I believe this is incorrect though it is the one I was told through the online chat with TP.
    b) That your pension is reduced to the point where you get, from the salary and pension combined, the equivalent of the salary of reference: Page 45 of the regulations, section 64 http://www.legislation.gov.uk/uksi/2010/990/made/data.pdf

    Taking your pension before you are 60 does mean you get less per year but because you get it for longer you start off being better off and it takes until you reach your late 70s, or in the case of taking it at 59 and 11 months nearly 100, to start to receive less. I did a sheet showing this here: https://docs.google.com/spreadsheets/d/1MmQ1h1AwCoC5IggRdVai4L0aBu5j0subZHCkVe3JNOw/edit?usp=sharing

    You can only take your pension if you are not in pensionable employment. (Phased retirement where your earnings drop by 20%+ being the exception)
  4. diddydave

    diddydave Established commenter

    Just had it confirmed from TP that 2b applies...if you take your pension at or after your Normal Pension Age then it gets limited to the gap between your salary of reference (updated for inflation) and you teaching wage.
  5. JanE60

    JanE60 New commenter

    Thanks for your help. You've confirmed what I thought. Just need to decide now whether to take the plunge back into classroom (I'll be 60 in a few months)...
  6. emerald52

    emerald52 Star commenter

    If you take your pension before you are 60 you can teach without affecting your pension.
  7. asnac

    asnac Established commenter

    @diddydave , what is the reason for the dramatic difference in the treatment of earnings between retiring before 60 and retiring after? Some sort of inducement to take the plunge earlier?
  8. diddydave

    diddydave Established commenter

    I have no knowledge as to why there is an abatement element within the pension scheme. I have a vague recollection of once being told, many years ago, it had something to do with using pension money to support new pension rights because when you are re-employed you have the right to be increase your pension by going back into the scheme...but I don't understand the logic of it in the slightest!

    If you've 'earned' a pension why would then taking a job for which you are 'paid' the going rate mean you should be penalised...I'm, sure it makes sense to someone somewhere (probably someone in charge of the purse strings) - but not me here and now ;)

    Certainly anyone who is looking to work beyond their NPA should take their benefits at least 1 month before their NPA to avoid this conundrum.

    I've also been looking at it in some more detail with respect to the differences between the two schemes - the final salary and career average scheme - and that is equally bizarre, I've asked a few questions last week. One thing I read was that if you have pensions from both schemes the total income is used to assess whether you have exceeded the salary of reference but that if you have exceeded the SoR only the Final Salary amount of the pension can be abated. However, if all of your pension is under the CA scheme there is no abatement.
    zagubov likes this.
  9. diddydave

    diddydave Established commenter

    Of course it has intrigued me some more.

    It would appear that the basis for abatement of pension is rooted in the Superannuation Act of 1834(!) and is based on public funds being used to support people through their retirement rather than being an actual sum of money - the scheme is an 'unfunded' one (there being no pot of money/investments built up over time) it is a promise by the State to pay for life the pension. The essence of this is then taken that if you are in employment by the State then the State is providing support to you through your wage and consequently do not need support you in your 'retirement' because you are NOT retired - with the concession that they will top up your income to the maximum that it used to be.

    zagubov likes this.
  10. asnac

    asnac Established commenter

    This source is absolutely fascinating to potter around, thank you. And I note that in 1968 Lord Swansea (speaking of medical practitioners) suggested to the government "Anyone who has the will, stamina or initiative to wish to work after retirement should not be subjected to heavy financial disincentives", to which the minister(?) Lord Bowles replied, "May I remind the House that the present practice derives from the Superannuation Act 1834? Therefore it has stood the test of time and doubtless the scrutiny of many previous Administrations. Her Majesty's Government regard the principles upon which it is based as still valid and are not willing to propose changes."

    So we've always done it like this and that's why we're going to carry on! Though in fairness he did go on to provide some justifications.

    It still seems bizarre that one can bypass this just by drawing a very slightly reduced pension before 60. You'd think there'd be some tapered arrangement rather than earnings abated age 60 yrs and 0 months vs earn what you like age 59 yrs and 11 months.
    PeterQuint likes this.
  11. diddydave

    diddydave Established commenter

    Yes, very strange...and taking it at 59 and 11 months is such a small difference that it takes you until you are nearly 99 before you start to fall behind!
    zagubov likes this.
  12. teejay24660

    teejay24660 New commenter

    Hello, I thought I would add that, further to our conversation on this very topic 10 days ago, I am going in for a meeting with my HT on Wednesday to discuss... I am thinking that it may be about the sort of contract he might offer me post- retirement if I do decide to take the pliung in the next few days. I will let you know! Thanks again for all of you help and advice.
    Sundaytrekker and diddydave like this.
  13. Thank you for all this information. I'm just at the beginning of this process with 7 months until I reach 60. Can anyone tell me if the same system applies if you take your teachers pension but continue to be employed by an LA under Local Gov conditions rather than TPC?
  14. Sundaytrekker

    Sundaytrekker Star commenter

    The only rule to consider is the need to have ceased employment in order take your benefits. Being employed outside of a teaching contract won’t affect it. You are likely to be automatically enrolled for the LA pension scheme for your new service.

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