If you are a member of the Teachers’ Pension Scheme, each year, you should receive communication relaying your benefits statement. This may come as a letter, or you may review the benefits statement online. If you visit My Pension Online (MPO), you can review your current benefits statement there.
What is the benefits statement?
The benefits statement shows your accrued benefits in your pension up to the point of calculation. This is provided on a summary page. The date of the calculation is important, as it may indicate that there are further benefits accrued within a year that have not been included. This calculation will have been devised using the last information provided by your employer, just before the statement is released.
The accuracy of the benefits statement is reliant on the correct service history held by the Teachers’ Pension Scheme. If there are missing years of service, then the calculation will be inaccurate. It is up to you to check this service history and then up to your employer to address this error for you. Your employer should investigate the service history issue and then seek to change details with the Teachers’ Pension Scheme directly.
However, this benefit statement is only illustrative. This means that there is no guarantee of the benefits listed in the statement, and you cannot assume a right to this benefit. This is a legal statement by the Teachers’ Pension Scheme. In short, they are saying that this is the best information they have at a set point and is open to change. However, you should be able to use this data to make plans for your future. If they were to decline to provide illustrations on the basis of potential inaccuracy, you would find it difficult to make choices about your retirement. Therefore, providing illustrative data is the best solution here.
If you think it is not going to be enough
It is worrying when you see an annual payment on your benefit statement, and you are convinced that this is not going to be enough. You have no desire to live in poverty from the age of 67 onwards. You would much prefer to retire comfortably before this time. What should you do?
- Don’t panic. This reflects your benefit now. If you are only ten years into a 40-year career, the benefits will grow substantially.
- Still, don’t panic. Your living costs in retirement will be much lower than they are now. You are potentially responsible for a mortgage, for children, for the running of multiple cars, etc. Many of these expenses will be eliminated or reduced by the time of retirement.
- Seek advice. If you are still genuinely concerned that the pension will not provide a liveable sum of money in retirement, then seek advice from a financial advisor. You can purchase Additional Voluntary Contributions, and other flexibilities could potentially be available.
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.