If you are planning retirement and wondering when you can access your Teachers’ Pension, you first need to know about the types of retirement available. Whatever happens in life, it is always best to be informed, and seeking advice from an independent financial advisor can help you choose which is appropriate for you.
This option allows you to take your benefits before you reach the Normal Pension Age (NPA). If you are 55 or over (57 in 2028) and are leaving the teaching profession, you can claim a pension. Beware, the benefits will be Actuary Adjusted Benefits (AAB), meaning the amount you receive will be less, reflecting that you will likely receive benefits for longer.
If you are in pensionable service, you must ask your employer if you can leave and take your benefits. However, they cannot withhold consent for more than six months, and your help 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 the 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.
Since 2007, members have been permitted to enjoy a phased retirement. The purpose of such pension 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 transition gradually from teaching, which is acknowledged as a difficult profession to continue into older age.
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 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 actuarily 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
If you become too ill to work during your teaching career, you can claim your pension benefits before your NPA without the usual reduction applied for early retirement. You will likely 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 with less than a year of life expectancy, 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.
Ill Health Retirement
When to retire is an important life decision. The Teachers’ Pension Scheme cannot offer advice on your specific circumstances. Therefore, it is best to seek independent financial advice before deciding. You can use calculators to assess the value of your pension on My Pension Online, though these are only indicative of what you might receive.
The content in this article was correct on 26th August 2022. 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. The value of your investment can fall as well as rise and is not guaranteed.