When you plan for the future, it feels easier to make decisions when there are confirmed figures. Ideally, you would go to the Teachers’ Pension Scheme website and to your dashboard, and there would be a projection of your pension benefits and the lump sum you will receive.
While it is understandable that you want certainty, especially if planning an early retirement, such projections are not available. If you were to go to My Pension Online, you would get see published the worth of your pension right now, at this point in your career. While there are calculators that can help you get an idea of your pension benefits, these are estimations and are not the guaranteed sum.
Why can’t TPS project my pension?
There are all sorts of reasons the Teachers’ Pension Scheme cannot project a future benefit.
First, your career path might change for some reason that cannot be predicted right now – for instance, you may get a promotion. The calculation of each arrangement is based on an average of either your whole career or of the best three years’ salary in the last decade of your career.
Second, the value of your pension increases each year to account for the cost of living. The Treasury issues a percentage figure for this increase, and if you are an active member of the Scheme 1.6% is added to this amount. As this figure can only be estimated into the future, an accurate projection of your pension is impossible.
Countless other scenarios make it undesirable for the Teachers’ Pension Scheme to attempt to offer a projection. While you might find this unhelpful when planning for your future, you will need to work from the estimations offered by the calculators on the website. If you need additional support considering the financial impact of early retirement or other issues that require an understanding of pension benefits, then seek advice from an independent financial advisor.
The content in this article was correct on 22nd January 2021. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pensions for teachers and non-teachers. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.