Category: NPA60 (80ths) Scheme

Permission Denied!

Your employer is allowed to deny permission for you to take “early” retirement for up to 6 months….is that for real?

There is a rule that says that if you are applying for “early” retirement then your employer has to “agree”.

A first sight the rule appears to be rather punitive, but once you drill down into the detail there is a “get out” clause and it is only when you understand why the rule was conceived in the first place does it even make any sense at all.

Your employer is entitled to withhold their permission for up to 6 months.

However, the “get out” clause is exactly as it sounds. Their denial of permission only lasts for as long as you are employed by them.

Their blocking of your application ends on the very last day of your employment, though you must have given the TPS at least 6 weeks notice.

Regulation 12(3)(b) under Schedule 7 (Case E: early retirement):

(b) where P ceases to be in that employment before 6 months have expired since the date on which P asks P’s employer to agree, such day as P specifies in the application, which must be no earlier than 6 weeks after the date on which P’s application is made.

https://www.legislation.gov.uk/uksi/2010/990/made/data.pdf

The rationale for this rule’s inclusion is that the pension scheme is not allowing a teacher to get around their contract of employment and take their pension whilst still “employed”.

A teacher has to give a minimum of 3 months notice to leave their employment and this rule is designed to prevent a teacher walking out of their contract and taking the pension immediately.

So, yes, taking the pension “early” requires you get the permission from your employer, but so long as you ASK for it, and apply for the pension, at least 6 weeks before the end of your employment contract it doesn’t matter if they give or deny you that permission since your pension will be paid on the first day after leaving employment so long as you have given the required notice to resign your employment.

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One Day Rule

Taking the pension “early” requires a break in employment…but how long a break?

The Regulations

https://www.legislation.gov.uk/uksi/2010/990/made/data.pdf

The Pension scheme lays down very clearly how long a break is needed in order to take the pension before you reach you Normal Pension Age:

The Schedule in the regulations that covers taking “Early” retirement starts on page 121 and is called “Case E”

Case E: early retirement with actuarial adjustment
10.—(1) A person (P) falls within this paragraph if—
(a) P was in pensionable or excluded employment at any time after 29th March 2000,
(b) P ceases to be in such employment,

Page 121, Case E (10), https://www.legislation.gov.uk/uksi/2010/990/made/data.pdf (The Teachers’ Pensions Regulations 2010)

There are other parts to this regulation but the key part above is that you have to “cease” to be in employment. This is then expanded on to explain what is meant be “ceasing” in regulation 14, shown below:

For the purpose of this Schedule—
14 (a) a person is not to be treated as ceasing to be in pensionable or excluded employment unless at least one day passes without the person being in such employment after the person ceases to be in such employment;

Page 122, Case E (14), https://www.legislation.gov.uk/uksi/2010/990/made/data.pdf (The Teachers’ Pensions Regulations 2010)

Simply put, you can take the pension early so long as you are not employed as a teacher ON the day you have asked for the pension to begin.

School Policies

Unfortunately many schools and LAs get confused over what is a break in employment, using what is needed to reset other employment rights and not what is needed for an employee to take their pension. There is no legal barrier to an employer ending, with the agreement of the employee, a contract of employment on one day and starting a new contract after a gap of 24 hours.

A number of schools HR departments are rather lazy in this regard and instead of just doing what is required to enable the employee to take their pension insist on a longer break because of their misunderstanding of what is needed to constitute a “break” in employment. This is often based on other employment rights, such as avoiding having to repay redundancy payments, or entitlement to sick pay etc.

Unfortunately, if they do insist on a longer break there is very little the teacher can do in such circumstances since they are over a barrel as they do need the break in employment in order to start taking the pension before their normal pension age.

This is NOT the case for teachers who have already reached their scheme’s normal pension age. They can start payment of their final salary pensions simply by opting out of the pension scheme without needed any break in employment.

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Consultation – Interest on Back Pay

One of the details hidden away as a reference to another document and then a reference from that document is the amount of “interest” that will be added to amounts owed to members for underpaid lump sums and pension payments.

Under Part 8, “Liabilities and payment”, in Chapter 2. (Page 35 of the draft regulations)

Interest
66.—(1) The scheme manager must calculate interest on a relevant amount described in direction 15 of the PSP Directions 2022 in accordance with the provisions of directions 14 and 15 which apply to that description of relevant amount.

On page 40 of this document is the table that lays out what the “interest” amounts will be…and they fall a long way short of inflation!

For comparison I have added a column to this table showing the inflation factors that were in effect on the dates shown:

https://docs.google.com/spreadsheets/d/1D_wdYsWUPTWMR_Cb6KEq3QNDIlld6AV4dc8_pTGX51g/edit?usp=sharing

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Pension Age Changes

The Teaching pension schemes are no strangers to changes in the pension age at which they are designed to be taken.

Before 2007 it was 60, then 65 and more recently has been brought into line with the state pension age. What is also changing is the MINIMUM pension age – the age at which you can, with a reduction, take the pension.

Link to the youTube Video

The GOOD news is that as the legislation stands the final salary schemes, those that teachers were in before 1 April 2015, retain the pension ages as they were – no real surprise there as that was the contractual obligation, teachers will get what they signed up and paid for.

The BAD news is that the newer, career average, scheme was written differently and so IS subject to the change. If you are not 55 before 6 April 2028 then you won’t be able to access this part of the pension until you reach 57. Also, the plan is to raise this further in the future to 58 and for it to then track 10 years behind the state pension age. Remember though that taking it 10 years early does mean you will be paid less to make up for the fact you will be paid it for longer.

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Happy 60th

60+ and still teaching?

The end of the final salary scheme on 1 April 2022 presents you with an opportunity to take your final salary pension, continue working AND get paid more.

https://youtu.be/NyZsy_KSnlA

“Golf cake” by Eldriva is licensed under CC BY-ND 2.0. To view a copy of this license, visit https://creativecommons.org/licenses/by-nd/2.0/?ref=openverse&atype=rich

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