So, you’ve done it. Every September since leaving teaching, you have felt that weird itchiness to be filling in your registers again. You have missed your annual ritual of colour coding your timetable, and you desperately want to use the staple gun again. Now, you have made the leap and are back in the classroom. Exciting times – but what does this mean for your pension? Let’s take you through the basics.
Once you start working in a school, you will be automatically enrolled in the Teachers’ Pension Scheme, so there is nothing to do at first. You will make your contributions as before, as will your school. You will see these contributions on your salary slip, and you can review your benefits statement online.
Impact on benefits
If you were in the Final Salary arrangement when you left, you will be enrolled in the Career Average arrangement on your return. Your pension will accrue at a rate of 1/57th per year.
If you have returned before a five-year break, then the link to your previous pension will remain unbroken. However, after five years, any link to your Final Salary arrangement will have been severed. You may wish to speak to an independent financial advisor to consider the consequences on your benefits.
Playing catch up
It might be that you want to increase your benefits in your pension. It is a valuable long-term savings scheme, and there are options for putting more money into the Career Average arrangement. You can choose from three different flexibilities: Buy Out, Additional Pension, and Faster Accrual. You can also speak to an advisor about Additional Voluntary Contributions (AVCs), but these are not managed by the Teachers’ Pension Scheme.
While there is an overall financial limit to the amount of flexibility you can buy, some of those you purchase come with some tax relief.
You may wish to speak to an independent financial advisor who will be able to offer you guidance on the best route to making the most of these schemes to pay more into your pension.
The content in this article was correct on August 16th 2021. 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.