Dramatic events can cause us to re-evaluate our position in life. It may be that you have enjoyed this extended period out of school, reconnecting with your family. You may have used the time to start that venture that you always dreamed about, but never found the space to achieve.
Leaving teaching leads to a break in service. If this break in your teaching service is less than 5 years, then the impact on your pension is negligible. You will have accrued fewer years than you might have done but generally, this will have limited impact on your benefits.
However, if you re-enter service after five years or more, then the impacts are significant. For instance, if you are a protected or tapered member, part or all your pension will be in the Final Salary Scheme. If you return to teaching, you will be auto-enrolled in the career-average scheme.
If you have some benefits in the final salary and the career average arrangements and you return within five years, your final salary benefits are protected but any benefits paid in after you return will be paid into the career average scheme. This is called the final salary link. Return after five years and the link is broken and the salary at the time of the break will be used to calculate the benefits for this part of your pension fund.
In short, if you have decided you need a change right now, you have five years before this will impact on your pension. This is a significant amount of time and usually, you would have worked out long before this whether a return to teaching is sensible for you.
The content in this article was correct on 15th May 2020. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on the different types of retirement available with the Teachers’ Pension Scheme. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.