Types of retirement 1.Normal age retirement – NPA. Pensionable employment counts up to 75yrs. Unable to pay into TPS after age 75, even if working. 2.Phased retirement – work part time and access part of your pension. 3.Actuarially adjusted benefits [AAB] – claim your retirement benefits after 55yrs. Pension is spread over longer period therefore, smaller pension and lump sum. Approx 4% actuarially reduced per year. 4.Premature retirement – employer’s discretion. 5.Ill-health retirement – permanently unfit to teach before NPA
Phased retirement A way to combine your pension with more flexible working arrangements Can access up to 75% of pension from age 55yrs without ceasing work completely Must reduce work by at least 20% for at least 12mths. Can then go back to FT if post is available Before age 60, pension is actuarially reduced After age 60, pension abatement applies This option can be accessed twice before final retirement Must be agreed by employer
Pension abatement [reduction] Between 55yrs and 59yrs 11mths – taking phased retirement means you are not subject to pension abatement If you retire once you are 60+yrs and in TPS prior to 2007, pension abatement applies Pension abatement: cannot return to HE after retirement and earn more with your pension plus pay than you would have earned before retirement. Can access tax free lump sum only If you work in areas other than HE after retiring, you are able to access all your pension
Benefits of phased retirement 1.No break in service 2.You do not lose accrued rights to sick pay, redundancy notice or redundancy pay 3.You continue to add further years of service into the scheme 4.You continue to be covered by death in service grant 5.Succession planning for employer 6.Employ newer staff on lower salary grade – cost efficiency 7.Employee continues as a member of TPS 8.Employer retains expertise of TPS member for several more years 9.After being on phased retirement for minimum of 12mths, you may apply for permanent retirement or return to your previous post if the hours are available
Example to illustrate Member is 58 years old, salary is £40,000. Has 20 yrs service in TPS. On taking phased retirement, at least a 20% reduction in salary is required so £40,000 x 80% = £32,000 Can then take up to 75% of pension, so will take 15 years pension rather than 20 years, and this pension will be actuarially reduced using a factor of 91.1% [since actuarial reduction is approx 4% per yr] So pension will be (£40,000/80 x 15) x 91.1% = £6,832 plus an automatic tax free lump sum of £20,498 The member works two further years at 0.8, but is still based upon £40,000 salary Therefore when the member reaches the age of 60 and decides to take age related retirement they will receive another pension of (£40,000/80 x (5 + (2 x 0.8)) = £3,300 plus an automatic tax free lump sum of £9,900 This is where the 5 relates to the number of years left in the scheme when the phased retirement began, and the 2 x 0.8 being the extra service added to the scheme
Applying for phased retirement https://www.teacherspensions.co.uk/public/resources/~/m edia/Files/Documents/Forms/TP_Mem_Form_Phased_App. ashx https://www.teacherspensions.co.uk/ Apply using the Flexible Working Policy: http://www.yorksj.ac.uk/human-resources/hr/policies-and- procedures/a-z-results- page.aspx?idx=4133&idxltr=F&menupage=7152 Note: you are responsible for checking your pension contributions – no duty of care in pensions!