Returning to work after retirement
Retirement isn’t for everyone. Some people find being away from the classroom and the exuberance of young people too difficult. It might also be that the amount of money you are collecting in retirement doesn’t lead to a comfortable way of life. Therefore, you choose to go back into employment.
There are all sorts of rules about returning to work once you have claimed your retirement benefits. Indeed, whether you are in the final salary scheme or career average scheme will profoundly impact the viability of returning to the classroom. It is worth talking to an independent financial advisor about the possible consequences. For instance, your pension benefits may be suspended while you return to work. It could also mean that you continue to accrue benefits as you are counted as an active member again. It all depends on your circumstances.
How the earning limit could impact your choices
But what is this earning limit? Well, your earning limit is an amount you can earn each additional year you choose to return to employment after retirement. You can exceed this limit, but it will mean that your pension is subject to abatement – or you receive less money from your pension benefits. You might hear this limit referred to as the “Salary of Reference” – which you will find on your awards paperwork you received on retirement.
Be aware; this earnings limit only applies to final salary pensions for those on or after normal pension age who have claimed benefits. If you receive career average pension benefits too, the amount you are paid here will be added to your work salary and could draw you closer to the earnings limit.
It’s quite complicated
In short, it is possible to go back to work and to continue to claim your pension benefits. However, making this work so that you get the most reward from this will take some thought and consultation. You need to walk through your circumstances with a financial expert; else you could end up working hard for little more money.
The content in this article was correct on 4th July 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 and see how we can help you.