Congratulations, you are about to become a parent. You will be both terrified and excited – and, likely, you won’t be able to tell the difference between the two. Your pension might be the last thing on your mind right now. However, when you take maternity or paternity leave, there will be a natural knock on to your contributions. Also, having children makes the Death in Service benefits more significant to any legacy plan you put in place in the event of the worst happening to you.
Pensionable service and contributions
If you are receiving any contractual or statutory pay, then your pensionable service continues to increase. This is important – and the consequence of this is different depending on the arrangement you are in. You should seek advice from an advisor on the impact on your end pension due to the continued accrual of years on your pension at this time.
If you do not receive pay during this leave, you are not considered an active member of the Teacher Pensions Scheme.
If you continue to receive pay, then your contributions will be a proportion of your salary. It is the same proportion as you paid before, even though the amount will be lower.
Any adoption leave you take will be treated in precisely the way any other maternity or paternity leave would be treated.
Extending your leave
If you decide to take a more extended break, you have several options available to you. If you receive no contractual or statutory pay, then you will be deemed as out of service. This has significant consequences, as you will not be entitled to Death in Service benefits should you die during your break. You will be considered a deferred member until you return to pensionable service – also known as the time you start making pension contributions again. If you return to work within five years, then retrospective active member indexation will be applied.
If you leave teaching altogether, it may be possible to transfer your Teachers’ Pension to another defined benefit scheme. You should seek advice from an independent financial advisor before making such a change.
If you have worked for less than two years and you decide to leave teaching altogether, you can ask for a refund of your contributions.
The content in this article was correct on 15th January 2020. 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. See how we can help you.