1. Glasgow Local Association Scottish Teachers’ Pensions
27 February 2015
Drew Morrice

2. Background Teachers’ Pension Scheme Reforms 2007
The Independent Review of Public Sector Pensions
Pensions Act 2013

3. Scottish Teachers’ Superannuation/Pension Scheme
Defined benefit occupational pension scheme,
Administered by the Scottish Public Pensions Agency (SPPA) for Employers
Notional Fund
Underwritten by Government

4. 1 April 2015
Final Salary Scheme replaced with a Career Average Revalued Earnings (CARE) Scheme

5. Remain in Current Scheme if within 10 years of Normal Pension Age (NPA) at 1 April 2012
60 if commenced before 1 April 2007
65 if commenced on or after 1 April 2007
Tapered Protection if within 13.5 years of NPA
You transfer to CARE scheme at a later date

6. SPPA will write to: Non Protected – mid March
Tapered – mid March indicating transfer date
Protected – mid April
Preserved – mid June

7. What are the benefits?
Pension or Pension and Tax Free Lump Sum at retirement
Death in Service Benefits (from Day 1)
Widow(ers)’ and Family Benefits
Flexible Retirement Options

8. Family Benefits Death in service grant – 3 times pensionable salary
Widow’s and children’s pensions based on service from April 1972
Widower’s and Civil Partner’s pensions based on service from April 1988
Surviving Nominated Partner’s pensions based on service from April 2007

9. Benefit Calculation (NPA 60)
Pension = Pensionable Service x Pensionable Salary/80
22 years 45 days x £35,000/80
= £9,678
Lump Sum = 3 x Pension
= £29,034

10. Commutation of Pension (NPA 60)
Give up part of pension in return for larger tax free lump sum
Maximum allowable 19.64% of pension
For every £1 surrendered get £12
Pension £9,678 Lump Sum £29,034 Or
Pension £7,778 Lump Sum £51,834

11. Benefit Calculation (NPA 65)
Pension = Pensionable Service x Pensionable Salary/60
No automatic lump sum
22 years 45 days x £35,000/60
= £12,905

12. Commutation of Pension (NPA 65)
Give up part of pension in return for larger tax free lump sum
Maximum allowable 35.71% of pension
For every £1 surrendered get £12
Pension £12,905 Or
Pension £8,297 Lump Sum £55,296

13. Pensionable Salary
Pensionable salary received in last 12 months before retirement; or
The average of the best 3 consecutive years in the last 10 years revalued by CPI;
but
Excessive salary increases in last 3 years will be limited to 10% above substantive salary

14. Best 3 years in last 10 years (Point 6 on Maingrade Scale)
2005/06 £30, £39,582
2006/07 £31, £38,970
2007/08 £31, £38,419 £38,991
2008/09 £32, £37,538 £38,309
2009/10 £33, £38,478 £38,145
2010/11 £34, £38,215 £38,077
2011/12 £34, £36,327 £37,673

15. When Can I Retire? From age 60/65 without any reduction in benefits
Must leave scheme at age 75 but not teaching
Maximum pensionable service is 45 years at age 75

16. Retirement Options Actuarially Reduced Pension
from age 55
Premature Retirement Compensation
on efficiency grounds from age 55
Winding Down Scheme
Part time working but eligibility criteria
Phased Retirement
from age 55 can access some benefits whilst working part time

17. Actuarially Reduced Pension
Employer can withhold permission for up to 6 months
Reduction in pension and lump sum is for life
Percentage reduction dependent on age in years and months
Can return to teach, rejoin STSS and no earnings restriction

18. Premature Retirement Compensation Scheme
Actuarially Reduced element payable by SPPA
Mandatory Compensation payable by Employer
Discretionary Enhancement payable by Employer
Can return to teach and rejoin scheme but earnings limits – abatement of pension

19. Winding Down Scheme From Age 56/61
25 years teaching service last 10 full time
Minimum contract 0.5 fte
Maximum period in scheme 4 years
Pensionable salary calculated on 365 days before winding down but revalued by CPI
Must be with agreement of Employer

20. Phased Retirement
Facility to remain in current post, work part time and draw down pension
Must be aged 55 or over
Must reduce salary by at least 20%
Can access up to 75% of accrued benefits - actuarially reduced if under age 60
Can draw down pension on two occasions before formal retirement date

21. After Retirement Lump Sum is tax free
Pension is taxed at appropriate rate after deduction of personal allowance
Return to teaching there is a limit to the amount you can earn unless on ARP grounds

22. Increasing Benefits Additional Voluntary Contributions
Return dependant on stock market
Additional Pension Benefits
Blocks of £250
Cost dependant on age
Lump sum or monthly deduction

23. APB £250 Comparison Age 45 Age 55
£3,110 by lump sum or £93.20/month for 3 years
Age 55
£4,110 by lump sum or £124.10/month for 3 years

24. Contributions (from 1/4/15)
Employee Contribution
Up to £25,999 – 7.2%
£26,000 - £34,999 – 8.7%
£35,000 - £41,499 – 9.7%
£41,500 – £54,999 – 10.4%
£55,000 - £74,999 – 11.5%
£75, %
Employer Contribution
17.2% of Salary (from 1/9/15)

25. STPS 2015
New Career Average Revalued Earnings (CARE) Scheme from 1 April 2015
Retirement Age linked to State Pension Age
Age 50/55 or over at 1 April 2012 remain in current arrangement
Tapered protection if over 46.5/51.5 at 1 April 2012

26. STPS 2015
Change will apply to future service – what you have accrued you keep
Tiered Contributions on actual salary
If transferred to new scheme you can retire at NPA 60/65 and leave post 2015 service until new pension age
Cost Ceiling for Employer Contributions
Improved Scheme Governance

27. CARE Accrual 1/57 + CPI (2%) + 1.6% Salary 1/57 CPI +1.6% Pension
£34,000 £ £687.10
£34,500 £ £672.99
£35,000 £ £659.04
£35,500 £ £645.22
£36,000 £ £631.57
Total £3,295.91

28. Other Options Purchase faster accrual for a particular
Year. Decide in April – 1/45, 1/50 or 1/55
Buy out actuarial reduction if NPA 66 or higher for years after 65. Need to decide within 6 months of joining

29. Any Questions