If you are planning retirement and wondering when you can access your Teachers’ Pension, you first need to know something about the types of retirement. Some of these retirement types can be planned for, and some will be thrust upon you. Whatever happens in life, it is always best to be informed. Better still, you need to understand when you can claim your Teachers’ Pension benefits.
This option gives you the chance to take your benefits before you reach Normal Pension Age (NPA). If you are aged 55 or over and are leaving the teaching profession, you can claim a pension. Beware, the benefits will be Actuary Adjusted Benefits (AAB). This means the amount you receive will be less, reflecting that you are likely to receive benefits for longer. The adjustment takes into consideration that you will be paid up to Normal Pension Age and beyond and therefore pays less to cover a more extended period.
If you are in pensionable service, you will need to ask your employer if you can leave and take your benefits. However, they cannot withhold consent for more than six months. Also your benefits will begin the day after you cease pensionable service. You will know if you are in pensionable service if you are still paying contributions from your salary each month.
Normal Age Retirement
Once you have reached Normal Pension Age, you should claim your benefits, but only if you have left service. If you delay making a claim, then your benefits will be backdated to your last day of service or the date when you reached NPA – whichever is later. This backdated money will be paid in a lump sum and is subject to taxation.
Your NPA in a final salary scheme is different from the NPA in a career average scheme. It would be best if you spoke to an advisor about your specific situation.
From 2007, members have been permitted to enjoy a phased retirement. The purpose of such retirement is to allow members of the scheme to work part-time, or without additional responsibilities while withdrawing some of the pension to substitute for a lower income. The aim is to help people to transition gradually into not working in the bustle of a school.
You can withdraw a maximum of 75% of your benefits. You must be between 55 and 75 to qualify for phased retirement.
For more information about phased retirement and what it might mean for you, contact a financial advisor. This professional will talk you through the benefits and consequences.
If you are over 55, your employer may decide to ask you to leave your employment and may as a result offer premature retirement. This may be an alternative to potential redundancies that are required for a school to meet its budget, for instance. As this decision to offer premature retirement comes at a cost to the employer, it must be their responsibility to request this.
As with early retirement, if premature retirement is accepted on all sides, you will receive an actuarially adjusted pension, with your employer paying the balance of what you would have received had you been permitted to work to NPA. This is mandatory compensation. There is also the option for a discretionary enhancement by your employer to your pension benefits.
Ill Health Retirement
You come become too ill to work during your teaching career. If ill, you can claim your pension benefits before your NPA without the usual reduction applied for early retirement. It is likely that you will be expected to provide medical evidence to support your application. There will be fees associated with the provision of this evidence.
If you have been diagnosed with a terminal illness, where your life expectancy is less than a year, you can claim your pension as a lump sum. If you have been in service for less than two years, you do not qualify for this, but you may be able to seek a short-service serious ill-health grant.
The content in this article was correct on 25th April 2019. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on the different types of retirement available with the Teachers’ Pension Scheme. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.