The Teachers’ Pension, UK is thought to be a generous scheme. It is one that offers the opportunity for a comfortable retirement. Moneywise list a teachers’ pension in the top 10 jobs to have if you want to retire comfortably.
However, not all the Teachers’ Pension Schemes, UK-wide, are run by the same organisation. If you choose to move to Scotland then your pension will be different in small ways. It is important to understand the differences, as you may be given the option to transfer your Teachers’ Pensions Scheme from England, Wales and Northern Ireland to that covered by Scotland, or vice versa.
Here we explore what you need to consider if you are thinking of working as a teacher in Scotland.
When you visit the SPPA, the Scottish Public Pensions Agency, you will find that there is a lot you will recognise if you already have a pension with the England, Wales and Northern Ireland Teachers’ Pension Scheme. The schemes benefits include a guaranteed pension when you retire, a pension that is index-linked, the chance to receive a tax-free lump sum, a lump sum if you die before you retire, and more. Your employers will also contribute, plus there are opportunities to pay for extra contributions to receive additional benefits.
A different organisation
The major difference is the organisation who is charged with managing the pension scheme. The SPPA is an agency of the Scottish Government. It is this organisation that administers the pension and provides policy advice to ministers in Scotland. This means that although the general features of the pensions will seem similar to those of England, Wales and Northern Ireland, the administration can be different, and the general direction of pensions are open to divergence.
This also means that if you start your service in England, Wales or Northern Ireland and then move to Scotland, you may wish to transfer your pension rights to ensure a continuous pension record.
Transferring into the Scottish Teacher Pension Scheme
It is possible to transfer from or to the Scottish Teachers’ Pension Scheme if you apply within 12 months of entering service and if the scheme you are transferring from meets the requirements of the HMRC. The Teachers’ Pension Scheme, UK meets the HMRC requirements.
To transfer to the Scottish Teachers’ Pension Scheme, you should complete a joiner questionnaire form. It is possible to use this form to carry across any protections you have previously enjoyed, as well as the credit accrued. Therefore, it is essential to record public pensions on this form.
On completion and processing of this form, the SPPA will give you an estimate of the transfer value of this “credit”. At this point, it is important to seek independent financial advice, as this transfer of pension may or may not benefit you. The SPPA will not offer advice; they will insist that the decision is entirely yours. Therefore, seeking out a financial advisor will give you the information you need to make an informed decision.
Although there are many similarities between the Scottish scheme and the Teachers’ Pension Scheme from the rest of the UK, your pension will not automatically transfer to the STSS. You must request the transfer of credit. This may or may not be a good option for you; therefore, you should seek advice.
The content in this article was correct on 31st January 2018. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pension schemes. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.