Category: Planning

Overtime – Refund, but NOW or LATER?

https://youtu.be/pXWVro3ZAnU

With the “rollback” taking effect every, eligible, teacher has had their 2015-2022 service returned to the final salary scheme and as a result “overtime” causes an issue for the administrators.

Overtime is NOT pensionable under the final salary scheme but IS pensionable under the career average scheme.

This means that if you had overtime in the remedy period you paid the pension scheme around 10% of that in return for some pension, just the same as you do for your normal wages. However, that should only happen if you are in the career average scheme and not if you are in the final salary scheme. The “solution” is for the scheme to refund you what you paid, but they really do not explain what you may be giving up if you take this refund.

This video goes into your real options and consequences.

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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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