The Teachers Pension Scheme

Transcription

1 The Teachers Pension Scheme

2 Today s session And what we hope you ll get out of it. It s a basic overview. Pensions are complex and so we can t squeeze all the finer details into this session. If you want to know more, our website will give you more in depth information: We want you to understand the value of your pension, how we manage it and how we can help you get more from the scheme. Who we are & what we do Scheme background Making your pension work for you Life changes Planning for your retirement

3 Teachers Pensions; who we are and what we do

4 Who we are We re responsible for administrating the Teachers Pension Scheme on behalf of the Department for Education. We manage the second largest Public Sector Pension Scheme in England and Wales with over 1.6 million members, and this is growing all the time. 1.6m number of members in the scheme 2nd largest public sector pension scheme

5 What we do for you We can t alter your contribution levels, we can t adjust your working hours, but we can change the way we work together to manage your pension. We will make every effort to help you understand and appreciate the value and quality of your pension scheme, and will equip you to manage that pension in support of your personal retirement goals We engage in ways that best meet your needs, honestly, with transparency, without using jargon or being impatient. This is how we earn your trust. We are experts in our product, but also know we can learn from you.

6 Keep in touch We operate what we call a channel of choice. That means you can contact us via the best method for you. If you want to access your pension information online, it s there. If you want to call us, you can. Talk to us Talk to your employer If you want to discuss your pension with your employer, go ahead. It s your pension, manage it in the way that suits you best. Visit our website

7 My Pension Online My Pension Online is our secure portal where you can manage your pension online (the clue s in the name!) Through My Pension Online, you can: 1.See the current value of your pension 2.Update personal information 3.Nominate and update recipients of death benefits 4.Purchase additional pension credits 5.Opt out 6.Apply for NPA/AAB retirement 7.Send secure s to us and receive communications and information To access these facilities please first register at

8 Scheme background

9 The main benefits of your pension You receive guaranteed benefits through the Teachers Pension Scheme and membership is automatic but not compulsory The value of your pension is calculated by using your final average salary and adding together all your periods of service Your employer makes generous contributions into your pension on your behalf It's a Defined Benefit Scheme, based on your salary and service rather than investments Your pension will be a regular source of income when you retire but you can also take some of it as a tax-free lump sum

10 More good things you should know about your pension If you ve a family or other dependants, your pension may give them an income after you die To boost your pension benefits you may be able to make extra contributions Your pension is index-linked, so it s protected against rises in inflation If you re sick and are entitled to ill health benefits, you ll get them as soon as possible You may be able to transfer credits from other pension schemes you ve contributed to

11 Who s eligible? If you re in a role your employer deems to be applicable, you re automatically entered into the scheme. Entry is automatic, but not compulsory. To qualify for retirement benefits, you must complete: Two years of pensionable employment after 5 April 1988; or A total of five years pensionable employment at any time

12 What s in it for me? You contribute a percentage of your salary (before Tax & NI) Employer adds a further 14.1% (that s generous by the way!) Guaranteed pension when you retire Isn t affected by fluctuations in the economy Index linked Option to take tax free lump sums on retirement

13 Making your pension work for you

14 When can you retire? Your Normal Pension Age (NPA) all depends when you started your pensionable career. Member before 1 Jan 2007? Aged 60 Became a member after 1 Jan 2007? Aged 65 There are some exceptions If you were a member before 1 Jan 2007, but had a break of more than five years, your NPA remains at 60 for service up to the end of the break in service. But it will be 65 for any future service. In pension terms you ll be classed as a member with mixed service.

15 How we calculate your pension Your Teacher s Pension is a classed as a Defined Benefit Scheme, so it s based on your salary and service Salary Service Your pension benefits This is different to Defined Contributions schemes, where the pension would be based on the value of the contributions made and how those investments have performed.

16 What will your pension be worth? Now for the maths (We ve simplified this a bit, but if you want the finer details, you can stay behind after class) Members who joined the scheme before 2007: Final Average Salary Service 80 Annual pension and you get.. Lump Sum (3x annual pension) Members who joined the scheme after 2007 Final Average Salary Service 60 Annual pension If you don t get a lump sum, you can convert part of your annual pension to get one. If you already get a lump sum, you can convert part of your annual pension to get more.

17 What do we mean by final average salary? Final average salary is calculated by using the higher of: or The pensionable salary received in the last 12 months of employment before the date of retirement (subject to an excessive salary check) The average of the best three consecutive years salaries index linked in the last ten years

18 For a member who has an NPA of 60 A member has 26 years & 161 days of reckonable service and final average salary of 32, , (NPA 60) = 10,629 pension = 31,887 lump sum 60,000 50,000 If the member was to 40,000 convert the maximum, it would mean their annual 30,000 pension would decrease 20,000 to 8,542 but the lump 10,000 sum would increase to 0 56,940. Pension Lump Sum Pension Lump Sum NPA 60 NPA 60 (convert lump sum)

19 For a member who has an NPA of 65 A member has 26 years & 161 days of reckonable service and final average salary of 32, , (NPA 65) 14, pension 70,000 If the member was to convert the maximum, it would mean their pension would reduce to 9,111 and they would receive a lump sum of 60, ,000 50,000 40,000 30,000 20,000 10,000 0 Pension Lump Sum Pension Lump Sum NPA 65 NPA 65 (convert lump sum)

20 Our pension calculator

21 Converting your pension into a lump sum Here s the small print Rate of 12 lump sum for every 1 of annual pension surrendered There will be limit on the amount of pension you can convert It involves some fairly complicated maths, but if you want to find out how much you could get, visit our web site and use our calculators It would also be worth talking to your Financial Advisor to see what s best for you

22 Adding to your pension benefits If you want to, you can transfer your pension credits from a previous scheme into your teacher s pension. You must apply for a transfer within one year of entering pensionable teaching service. You can also increase your retirement benefits by paying extra contributions by: Paying additional voluntary contributions (AVCs) through the Prudential Purchasing additional pension Paying into another registered pension scheme Your Added Pension Benefits

23 Death Grant In the event of your death, a Death Grant will be paid Death Grants Will be paid in the following circumstances: Death in service 3 x average salary Death out of service before retirement - 3/80ths of final salary for each year of service Death after retirement 5 x annual pension, less pension already paid Nominate a recipient If you re married or in a civil partnership, your partner will automatically receive your Death Grant when you die. However, if you re not married, or would rather your Death Grant went to someone else, you ll need to nominate them. You can nominate more than one person. It s up to you to review your nomination periodically to make sure your wishes are current.

24 Short term pension benefits After you die, we ll make sure your family is protected while we sort out your pension benefits. This will be in the form of a short term pension. Equivalent to your pensionable pay (if in service) or pension (if you re in receipt of pension benefits) at the time of your death It s paid for between three and six months from the day after your death Your children may also be paid a short-term pension Long term pension benefits will then be paid by us

25 Family Benefits Whereas Death Grants can be paid to any nominated person(s), Family Benefits can be paid to the following: The following people will automatically receive your benefits Spouses Registered Civil Partners Nominated Partners Children (subject to certain criteria) If none of the above is applicable, then you can nominate the following to receive benefits after you die: An unmarried or widowed parent A step parent An unmarried brother or sister

26 Childrens Pensions For children to be eligible to receive a pension, they must meet the following criteria: Unmarried Natural, adopted or financially dependant unadopted child(ren) Up to the age of 17 If over 17, is in full-time education or undergoing full-time training up to the age of 23 Incapacitated before the age of 17 and continues to be so and provided they are not fully maintained by the state

27 When things change

28 Changing jobs? Remarrying? Having kids? We can t stress enough how life changes will affect your pension If anything changes... Tell us! For example; If you leave work to have a baby, your contributions will continue, but if you decide not to come back to work, or work part time, this will affect your benefits. If you remarry, you ll need to tell us too. It affects the way any pension benefits are paid when you die. If anything else in your life changes, please let us know.

29 Working part time? If you re a part-time teacher, you are treated in the same way as a full-time member. You accrue reckonable service (proportionately) to be used in the calculation of benefits. In all calculations, we use the full-time equivalent salary. All your periods of reckonable service, both full and parttime, are added together when calculating any benefits. Once again, there are variations for individual circumstances, so make sure you read your member guide.

30 Let s work through an example Sue started her career as a full-time teacher and worked continuously for ten years. She then worked on a part-time basis (on a 50% contract) while bringing up her family for the next ten years, before returning to work full-time for the final ten years of her career. This means that her pensionable service is 30 years; but we d calculate that her reckonable service amounts to 25 years.

31 Planning for retirement

32 Planning for retirement It s never too early to start planning for your retirement. Check your monthly payslip this will tell you how much you re paying into your pension each month. It s so important that you check your Annual Benefit Statement every year and highlight any errors. It s easier to correct at this stage than in 30 years time. Throughout your career, tell us when things change. We re not being awkward, it s to make sure you get the pension you re entitled to.

33 Planning for retirement There are several different retirement options, including: Age retirement: want to retire at your NPA and enjoy your full pension? Age retirement could be for you. Actuarially adjusted: if you want to leave teaching early and start to claim your pension you can from the age of 55, but you will receive an adjusted pension because you take it before your normal pension age. Phased retirement: subject to certain criteria. Premature retirement: granted on grounds of redundancy or efficiency at the discretion of your employer. Ill health retirement: payable before normal pension age, if it s decided that you re unfit to teach. Don t forget, you can use the calculators on our website to help you with your retirement plans.

34 A little bit more on phased retirement Want to combine your pension with flexible working arrangements? You have the option to access your pension benefits from age 55 without giving up work completely. Phased retirement is available if you want to work in a reduced capacity (either full or part time) but supplement your earnings by claiming a proportion of your pension. You can claim up to 75% of your pension on two separate occasions. There are a few T&Cs, the main one being that your salary will need to reduce by at least 20% for at least 12 months to be eligible. Your employer(s) will need to agree the change in working patterns but this could be a great option for you to work flexibly in the last few years of your career.

35 You ll need to work closely with your employer and their Occupational Health Advisors to make your application. The final decision is made by us, taking into account evidence from Medical Advisors and other factors. Ill health benefits If you re ill, you may have to stop working even if you haven t reached retirement age. Ill health benefits come in two different types: Can t teach and can t ever work again? If you ve been assessed as being both totally unable to teach or take up gainful employment, you d be eligible for enhanced benefits, known as Total Incapacity Benefits (TIB). These are paid in addition to your accrued benefits (AB), providing you are still in service or within six months of leaving. Can t teach but can work? If you ve been assessed as being permanently unable to teach but can do other work you d be eligible for certain benefits which are based on your accrued reckonable service.

36 Planning for retirement Because you can retire from age 55, we don t automatically send you a retirement application when you reach your NPA. You ll need to tell us when you want to retire. We recommend that you start the application process three to four months before your retirement date. You can do this online for Age or AAB applications, or download the forms from the website If you have more than one employer, your retirement date must be agreed by all of them. An application form must be completed by each of your employers Your lump sum (if applicable) is paid on the first working day of your retirement You get monthly pension payments, which are paid the day before your birth date. If you were born on the 7th, your pension will be paid on the 6th of each month It can take up to three months to process an application, especially at peak times so please take this into consideration when planning for your retirement.

37 Decided you miss teaching? You have the flexibility to go back to work after you retire. Your new employment could add to your pension, as you can keep adding to your benefits until you re aged 75 or you have a maximum of 45 years service. Additional Service After Retirement (ASAR) If your ASAR is pensionable, you ll get further retirement benefits on application. These will be based on your extra reckonable service and new salary rates.

38 Reemployment and abatement Why do I need to let you know if I go back to work? If you return to teaching, the combined income of your pension and salary must not exceed your income before you retired. If it does, your pension will be abated and any overpayments will be recovered. To ensure this doesn t happen, you should send us a reemployment certificate as soon as you return to work, and for every tax year you remain in employment following your retirement.

39 And finally

40 Please remember...!!! It s your pension. It s your financial provision in your retirement. Treat it as a priority, it ll be worth it. When you need us, we re here. Our website contains all you need to know about the Teachers Pensions Scheme, and if you can t find what you re looking for, our lovely contact centre team can answer any questions. We re not Financial Advisors we know our stuff, but we can t give you financial advice speak to someone who can before making any decisions.

41 Any questions?

42 Our contact details Visit us at: Call us on: Monday Friday, 8.30am 6pm Write to us at: Teachers Pensions Mowden Hall Darlington, DL3 9EE