Are you confused by the use of the word ‘election’ on the Teachers’ Pension Scheme website? You may envision some vote or a ballot period where you may or may not be selected to be eligible. It is best to imagine the word “election” to mean the same as request and selection together. In other words, you have elected to make a set decision about your pension.
Stepping Down Election
Here you have elected to step down from one position to another within the teaching profession. At this point, you should go to the Teachers’ Pension Scheme website and make a ‘stepping down election’. This election is then checked for validity and then undergoes a set of calculations before your estimation of retirement benefits can be released. Here there is a two-part calculation that will be undertaken by the Teachers’ Pension Scheme upon your retirement. The calculation will see to find the most beneficial pension and lump sum under current rules.
AAB Buy Out
Another example of the use of the word election is with the buy out of the standard rate, also known as the AAB Buy Out (Actuarially Adjusted Benefits). Here you have elected to buy out any potential reduction you would incur due to early retirement. You have selected to do this and sent your request to the Teachers’ Pension Scheme. If you work beyond the age you buy out towards, you will not receive a refund on your contributions, and you will not benefit from electing to pay this money.
Why use the word elected?
The word elected shows that this is your choice, but it is up to the Teachers’ Pension Scheme to check the validity of the request. By using the word elected, there is a presumption that you have made an informed decision. The Teachers’ Pension Scheme then must merely fulfil it – if they are legally expected to do so – whether it is in your best interest or not. In short, the use of the term election is a means of saying ‘this is my choice, and I know you have the right sometimes to turn my request down.’
The content in this article was correct on 26th August 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.