Do teachers get final salary pension
Teachers who started work before 2015 will have been in a Final Salary Pension Scheme so these teachers do get a Final Salary Pension. A Final Salary Pension pays a higher level of benefits than the newer career-average deal.
Older teachers who had a normal pension age of either 60 or 65 and were within 10 years of that on 1st April 2012, remained in the final salary scheme as protected members.
To be eligible to receive a pension from the Teachers’ Pension Scheme you must have completed a certain minimum length of service. This is:
- two years’ pensionable employment at any time after 5 April 1988;
- two years’ pensionable employment at any time, if you were in pensionable employment on 6 April 1988; or five years’ pensionable employment at any time.
How much you receive in your pension depends on which of the teachers’ pensions you joined and your Normal Pension Age (NPA). The date you joined will either put you in the final salary arrangement or the career average arrangement.
Teachers’ pensions can be confusing to a lot of people, and they are the source of much debate. If you’re a teacher working in a state-funded school in the UK, you will automatically be enrolled in the Teachers’ Pension Scheme (TPS). The amount you pay and the amount you’ll receive when you retire depends on which of the teachers’ pension schemes you have joined.
Teachers’ pensions are complicated things and can make planning for retirement a confusing prospect. Unless you’re a mathematics teacher or have a financial adviser, you could be forgiven for glossing-over the small print on your pension contract.
Those of you in the career average arrangement with a Normal Pension Age (NPA) ranging between 65 and 68 will have an accrual rate of 1/57th of your pensionable salary for each tax year (April to March) you contribute to the Teachers’ Pension Scheme, plus a variable amount (Consumer Prices Index plus 1.6 per cent) dictated by HM Treasury.
The Government ‘Proposed Final Agreement’ on pensions contained provisions for transitional protection. Whether you have protection depends on your age on 1 April 2012 and your TPS Normal Pension Age (NPA) (the age at which you can get your teachers’ pension in full).
If you were within ten years of your NPA on 1 April 2012 (i.e., 50 or over if your TPS pension age is 60 or 55 or over if it is 65) then you will stay in the final salary scheme provided that you don’t have a break from the teaching of five years or more. This applies even if you work past the scheme retirement age.
If you’re working part-time, your service counts at its full-time equivalent for the purposes of qualifying for a pension. Like full-timers, you only need two years’ pensionable employment at any time after 5 April 1988 (as an example) to qualify.
You can opt-out of making pension contributions by logging into your account and filling in an online form. You’ll be entitled to claim back payments as long as forms are completed by you and your employer within three months of enrolment.
This article looked at an introduction to "Do teachers get a Final Salary Pension" but there is a great deal more to consider than is covered in this article. Defined Benefit Teachers’ Pensions are state-funded and as of the time of writing this article, cannot be transferred out to a private pension pot.
Private school teachers are being transitioned to defined contribution pension arrangements. Defined contribution pensions are a fixed amount of money and can be transferred to other defined contribution arrangements.
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Would you like to get some professional advice to gain increased financial peace of mind and family security? If the answer is yes, the next step is to have an informal exploratory chat with a qualified financial adviser to see if it is worthwhile proceeding to the formal process known as regulated financial advice.
