As we head into 2022, we all begin to consider how to make the most of this fresh start. While 2021 might have been a challenging year for many, 2022 offers a gleam of possibility to become more of what we hope.
One decision you might make in 2022 is to invest more time in yourself and your family. Currently, early retirement is available from the age of 55, and in 2028, the early retirement age will change to 57. While you can retire at this age, the amount of pension you receive is impacted by your choice to leave teaching early. Here we look at the adjustment made to your pension and the impact.
What is an actuarial adjustment?
An actuarial adjustment refers to the tables used to calculate the reduction to your benefits if you retire. An actuary is a statistician that considers the impact on your benefits due to the fewer years of a pension benefit accrued and the reality that you will be claiming the pension for longer.
How much will my pension be reduced?
As with everything to do with your pension, the answer to any question about the impact of decisions is – it depends. There will be a reduction to both your lump sum and your benefits. The calculation for the reduction will depend on how early you retire and how close you are to your Normal Pension Age. It also depends on what arrangement you are in, as the calculation will differ from your Final Salary pension to your Career Average arrangement.
It is worth remembering that the Teacher Pension Scheme cannot offer advice about what actions you take with your pension. If you want to understand whether you can afford early retirement or not, you are best advised to approach some who can offer you independent financial advice.
Weighing up the decision
When you decide whether early retirement is for you, you need to balance your financial security with the lifestyle you want to shape for the next portion of your life.
The content in this article was correct on 11th December 2021. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on your teachers’ pension scheme, as well as financial matters in general. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.