Very few people enjoy a career for life or continue in a job without breaks. If you experience an interruption in service there will be some impact on your pension.
From April 2015, the Teachers’ Pension Scheme changed from a Final Salary Scheme to a Career Average arrangement. You will be a protected, tapered or transitioned member if you joined teaching before this date. However, if you leave the scheme for more than five years, you could change your member type and the benefits you accrue.
Before taking your break from teaching, it is essential to know if you are a protected member. If you are a protected member you could change your status by taking more than five years out of pensionable service. This is called a disqualifying break. When you re-join the profession and the pension scheme, you will be enrolled on the Career Average arrangement. If you enjoyed continuous service without the disqualifying break, you would remain in the more generous Final Salary scheme.
You will also have broken the salary link between your Final Salary pension and your Career Average arrangement. This impacts protected, tapered and transitioned members. This link means that your Final Salary pension is calculated using your Career Average arrangements. However, if you break this link, then your final salary is calculated from the time you began your career break. This could see a significant reduction in your benefits.
If you need assistance in a) understanding your member type or b) considering the consequences of an extended break from the classroom, you should talk to a financial advisor. This will help you make the most of your time while ensuring you have a quality of life you expect in retirement.
The content in this article was correct on 15th July 2019. 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.