Help – my employer is insisting I need a break in employment!

January 2025

I received this plea from a teacher who was in the process of getting agreement to take “phased” retirement.

The employer was, mistakenly, insisting that there had to be a break of at least one day between contracts – something that is most certainly NOT a requirement for PHASED retirement….EARLY retirement is another matter of course.

The response I coined for them was this:

I can see that there is some confusion over the need, or not, to have a day’s break between contracts.
Previously there was no such thing as “phased” retirement and I believe the policy you are referring to relates solely to what is known as “early” retirement.

The need to have a break between employments to take “early” retirement is clearly noted in the most recent set of regulations, “The Teachers’ Pension Scheme Regulations 2014”, where, in regulation 104(c) it states that to be entitled to an early retirement pension the person, and I quote, “has left all eligible employment” on the day the pension starts.

However, the whole point of introducing “phased” retirement was to allow teachers to continue without requiring a break in employment. Indeed, such a break, if it were to take place after the teacher had reached the “normal” pension age, would prevent the teacher from taking a “phased” retirement as it triggers the “normal age” retirement.

In Chapter 3, which regulates the new “phased” retirement option, it is clear that there is no similar requirement for there to be a gap in employment or for a whole new contract.
Indeed regulation 90 makes it clear that a person can be continuing in employment so long as the terms change and that they are not earning more than 80% of their previous rate.
To quote regulation 90:
“90. A person (P) meets the reduced annual rate condition if—
(a) P is in one or more eligible employments;
(b) the terms of employment change and as a result there is a reduction in the annual rate of P’s pensionable earnings; and
(c) the reduced annual rate is not more than 80% of the average annual rate of P’s pensionable earnings for the 6 months of pensionable service immediately before the reduction.”
Taken together this clearly indicates that this is not a new contract but simply a change in the terms of the contract.

To make it even clearer that a new employment under a new contract is not required we can look further to regulation 93 that determines a teacher’s entitlement to a phased retirement pension:
To quote
“Entitlement to phased retirement pension
93.—
(1) A person (P) is entitled to payment of a phased retirement earned pension from the entitlement day if—
(a) P has reached normal minimum pension age but has not reached 75;
(b) P is qualified or re-qualified for retirement benefits;
(c) P meets the reduced annual rate condition or the new employment condition;
(d) P has made a phased retirement application; and
(e) P has not applied under regulation 162 for payment of any other retirement pension.

(2) P is entitled to payment of a phased retirement additional pension from the entitlement day if P has applied under regulation 94 to receive an additional pension with the phased retirement earned pension.
(3) Subject to regulation 97, a phased retirement pension is payable for life”

93(c) is clearly the part that is leading to the confusion we are having to deal with.
The word “or” being  the key element.
Where the TPS have said, and I quote “If a staff member is submitting a phased Retirement form, they can leave and return 1 day later on a reduced contract.” they have given only half an answer. Yes, the staff member CAN leave and return on a reduced contract but that, under 93(1)(c), is only the latter part of what they CAN do. They CAN also become entitled to a phased pension by meeting the reduced annual rate condition. One does not preclude or require the other.
Half an answer from one member of the TPS help desk should not be taken to mean any more than it says and when you look at their factsheet, published in April 2024, this document is crystal clear in its assertion that, unlike the other types of retirement – such as the early retirement that I have quoted previously and that I believe you are working under the misconception that those conditions also apply to phased retirement, phased retirement most certainly does not require a  break in employment.
https://www.teacherspensions.co.uk/-/media/documents/member/factsheets/applying-for-retirement/phased-retirement-factsheet.ashx
To quote “You don’t have to take a one day break in employment to take Phased Retirement (as you do with other types of retirement in the Scheme).“