Category: Pension scheme

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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Successful Bits

Ok, so this is a bit of self-indulgent navel gazing where I intend to reflect on campaigns and other stuff that I feel might have made a difference.

Facebook Group

https://www.facebook.com/groups/230186658803343/

I started a “Teacher to Teacher” self-help group in 2020, as of today in May 2024 there are over 15,000 teachers in the group, helping each other navigate the peculiarities of the TPS. The group has also helped put pressure on the administrators to clarify what is meant in some of their communications.

YouTube Channel

Many aspects of the TPS can be confusing and so I set about producing videos to “explain” them more clearly. The channel now has over 40 such videos and more are planned.

https://www.youtube.com/@dfountain

Pay Freeze Pension Consequences

The Pay Freeze pension implications. Back in 2020 I became aware of the implications for pensions of the rule used to calculate the final salary that only re-valued salaries from the date of a change in pay. The briefing document was taken up by the main unions and has been discussed at the DFE and the Pension Board. Many authorities are now taking action to ensure teachers do not lose out twice during pay freezes.

Links to areas confirmed:

Case Studies on TPS

Case studies published on the TPS website were misleading and had significant mathematical errors that over benefitted the newer Career average scheme. Challenges to these through the TPS facebook page led to the case studies being withdrawn and re-worked with *slightly* better scenarios – though still with scenarios that unduly flattered the career average option (teachers in the NPA60 scheme working until 65 etc).

Career Average Pension Calculator

The TPS website has many useful calculators but one in particular caused me major concern. The career average calculator included assumptions on future inflation and factored those into the results. Using inflation itself wasn’t a problem but the resulting ‘pension’ then lacked any context. I pointed out, repeatedly, that it was no good being told that you’d be getting a pension in 40 years time of £110,000 a year if you didn’t know how much a loaf of bread was going to cost in 40 years time. The calculator has had the inflation element removed.

Teacher Knowledge

With over a decade of below inflation pay rises and the ending of the final salary scheme there has never been a better time for teachers to be made aware of how the rules can work in their favour. In particular the hypothetical calculation can now be used much more sympathetically. The main successes in this area has been where I’ve worked through the figures with teachers desperate to leave who didn’t realise that breaks they’d had back many moons ago would result in their pensions being significantly (up to 24%) higher than was being shown on their statements.

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Case Studies (Remedy Period)

The remedy period (1 April 2015 to 31 March 2022) is where each eligible teacher gets to choose which scheme it is counted in, either their original final salary scheme or the new career average scheme.

TPS produced some case studies that, in my opinion, appeared to have been designed with the intention to promote the new career average scheme and minimise the differences between the schemes rather than what should have been their primary purpose; to help members of the scheme identify with the examples and so improve their understanding of what is likely to happen to their pensions.

To this end I have created several case studies of my own that, again in my opinion, more closely resemble real cases. The first 3 of these are all based on a typical classroom teacher who reaches the top of the upper pay range and stays there until the end of their career.

In these cases all the teachers are looking to retire at 60 and take all of their pension at that time. This means that any career average pension will be actuarially reduced but this makes the comparison between the choices each member will be given much easier to make.

The three case studies are for;

  • A protected member (born before April 1962)
  • A tapered member (born between 1962 and 1965)
  • A transition member (born after September 1965)

Dave (Protected)

Marci (Tapered)

Sherri (Transition)

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