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).“
Highlighting when an imminent loss in value to the final salary pension is likely
Where a Method B calculation for the final “average salary” is using salaries that are about to become too old then the statement could include something to alert the teacher to this fact. Possibly colour-coding the months/years that are being lost, I would suggest red for those being lost in the next 6 months and amber for those that will be lost within 12 months.
Hypothetical Calculations
To be included on the statement, though this may be an issue of cost since every break creates a new calculation and some teachers, particularly supply staff, could have rather a lot of these.
Alternatively, including the final “average salary” that was in effect at the time of each break since this is a value critical in determining if the break is going to give rise to a “restricted” or “unrestricted” hypothetical calculation.
Indexation Increases after October
Currently the indexation figure being used for the year does not get added to the estimated pensions on the statements until the Government confirms it will use September’s CPI measure of inflation. The Government doesn’t tend to do this until the first months of the following year despite the figure being published by the ONS in October.
Given that the statements are only considered to be “estimates” there is no reason that once the inflation figure is published it could not be factored in to the calculation.
Progress reports – Transitional protection – Remediable Service Statement progress
Publishing, and then updating regularly, how many RSS’s need to be produced and the number currently distributed would give members a better understanding of the scale of the problem and appreciate how quickly it is being resolved, or not.
Progress reports – Pension applications
I would expect there to be a process that is followed rigorously when an application for a pension is made. The current task tracker lacks details on what those steps are and whether there are any sticking points.
A list of the steps with green ticks for complete, amber for steps that are waiting for 3rd party action and red for those that cannot be completed until prior steps are completed would give more reassurance that the application was being processed.
Conversion Letters – Use comparable figures
The conversion letters sent out to those who purchased extra pension in the remedy period offer compensation or a conversion to additional pension in the final salary scheme but the figures are not comparable.
The compensation is based on the value now, currently in 2024, but the conversion figures are either based on a value from April 2022, if the extra pension purchased is via Faster Accrual or the Early Buy Out, or the value from the date the original purchase of additional pension was made, potentially as far back as April 2015. The newest letters do tell teachers than indexation has to be applied from those dates but it would make far more sense to give them the valuation as of April 2024 as well.
Warning of abatement on approaching NPA
In the years leading up to a teachers normal pension age, 60 for those in the scheme prior to 2007 and 65 for those who joined between 2007 and 2015, that taking the pension on, or after, reaching the pension age invokes the rules on abatement if they continue in TPS-eligible employment
Threaded Communications
The structure of the message service on the website is geared to a single message and single response model. Great if the person responding answers the question being asked completely but confusing if follow up questions are required or they miss the point of the question.
Allowing messages to be threaded would remove the need to constantly repeat a whole message and clarify why the response sent was inadequate or misdirected.
The option to set a “subject” for the message would allow the sender to be able to find a specific message, at the moment they almost all have the same generic subject and reference:
Part Time Data
Where part time teachers have concurrent contracts the part time earnings column can often contain just a 1.00. This makes it nigh on impossible for teachers to work out if the payment, and therefore the pension entitlement, matches what they have been paid for during that period.
CETV Calculator
Held up for many months (even years) due to waiting for “something” it shouldn’t be necessary for a manual calculation of this to be asked for.
Reset or Locked Out
Members report that they cannot simply use the password “reset” function at times and when they finally get through to a support agent it is because the account has been “locked” and requires the agent themselves to reset it. A message to this effect would reduce frustration and speed up the reset process. (Having a “code” to quote to the agent could lead the agent directly to whatever support document is required to action the process)
Data Validation
Teachers are reporting that during the application process the “data cleanse” operation undertaken by the TPS administrators often throws up anomalies in the service history, often going back decades.
In my opinion many of these problems could have been identified earlier and questioned at the time when records are still intact. With the advent of GDPR many employers no longer keep records going back more than 7 years, identifying and correcting errors at the time is much more likely to lead to the correct data being used.
Classic errors that we see time and time again for which an automated process to identify them sooner should be possible include:
Annual Salary amounts jumping up and down, often because:
Part time salaries have been used
Updates to backdated pay awards have missed intervening months
Someone has “fudged” the figure in their payroll to account for previous under or over payments (or to accommodate the splitting of April to align with the financial year)
Breaks created where none exist, often because:
The 5 day period in April has been created to line up their records with the financial year and no entry has been submitted
School HR is unaware of the T&Cs of teacher contracts that require employment from set dates and not from when the employee first enters the building
Double entries for the same period, often where a school instead of submitting an update sends in a second record thinking it will overwrite the previous entry
Checks on Disqualifying Breaks
In 2007 the concept of the “disqualifying break” was introduced that had two significant impacts on the pension previously built up in the TPS
The final salary scheme lost the right to use salaries going forward and was limited to using only the salaries leading up to the break.
The career average scheme lost the 1.6% annual revaluation bonus and instead was limited to just the inflationary increase.
A disqualifying break is one that exceeds more than 5 years, BUT if the member was employed in another public sector post and paid into their pension scheme during that period then that can be used to “reset the clock” that measures the 5 year break. (Regulations 65 and 66 of the The Teachers’ Pension Scheme Regulations 2014)
Yet there is NO MECHANISM for proactively checking if the member, upon their return to the TPS, has had such service and as such there will be a number who are probably being underpaid when they take their pensions.
In a response to a FOI request to the DFE I was told “The onus is on the member to provide us with the information about their membership of other public service pensions schemes…”
In my opinion the scheme should be proactively ASKING a member when they return after a break of more than 5 years if they have any qualifying service in other pension schemes to ensure that they are put into the correct scheme and with the appropriate conditions. Simple assuming that they have no service in other relevant schemes is an abdication of responsibility.
Quality Control on Ill-Health Decision Letters
Those applying for ill health retirement are some of the most vulnerable members of the scheme, often at the lowest points in their lives and we have had reported that some have been receiving letters that are incorrectly advising their applications have been refused, whilst also containing the medical reports from the TPS’s own team stating that they should be approved. Upon challenging these letters it has been reported that the covering letter had been incorrectly selected and used.
With those receiving these letters already at their lowest points it doesn’t take much thought to realise that these could have lethal consequences.
The procedures for sending this letters MUST be changed to ensure that such an error cannot happen.
Alert the Teacher when records change
Schools/employers can change the records at any time and going back as far as they like. This is necessary where the records are incorrect of course, but there is NO warning given to the teacher by either the employer or the administrators of the TPS when this happens.
Any “update” to the record by an employer may be WRONG.
The administrators of the TPS should alert the teacher when a change is made to the historical records so that the teacher has the opportunity, at the time, to verify that the change was appropriate and, if necessary, to challenge the change with their employer.
With employers no longer being required to retain employment records for more than 7 years any mistakes made in such updates can become very difficult to correct if they are not identified in a timely manner.
For example, a school “updates” the wrong teacher’s record for an employment held 20 years ago having been given the evidence by a different teacher despite having no evidence of their own for this. The person at the school who made the update then might leave that employment and the incorrect update doesn’t come to light for another 20 years. There are then no records held by the school and nobody who can remember that an update was made. It becomes impossible for the school, or the wronged teacher, to put 2 and 2 together to work out what has happened.
If the TPS informed the teacher at the time the update was received from the school the teacher would have the chance to challenge it whilst the person who has made the change to the records would still be available to respond.
Mismatched Valuations on RSS
This is an appalling and, likely, a systemic problem.
I have been sent a number of statements where the two options have had the headline total “created” by adding the final salary and career average component parts where those parts have been valued to different periods in time. An FS pension valued in 2022 would be 17.48% LOWER than in 2024. This image shown shows the problem as the option 1 total would be, in 2024, worth £25,123 and option 2 would be £25,006…REVERSING which is the BEST annual value!
After hearing again, for the umpteenth time, that you MUST have a break in employment to take the final salary pension I decided to put the answer here.
UNDER 60 (Final Salary scheme started before 2007)
Yes, to take this pension “early” you MUST have a break in employment.
60 or OVER
NO! For the NPA60 scheme you do NOT need a break in employment, what you need is a break in “pensionable employment” and these are not the same thing. You can create such a break without leaving employment simply by opting out of the pension.
2.—(1) Where a person (P) satisfies the condition for retirement, the entitlement day for Case A is— (a) if P is not in pensionable employment on the day on which P reaches the normal pension age in relation to the reckonable service, the day on which P reaches that age, and (b) if P is in pensionable employment on the day on which P reaches the normal pension age in relation to the reckonable service, the day after P ceases to be in pensionable employment.
Part 2 – Pensionable employment
Regulation 7 paragraph 3
(3) A person who makes an election under regulation 9 (election for employment not to be pensionable) is not in pensionable employment while the election has effect.
All of my spreadsheets are now collected in one section of the website. These can be copied which allows users to enter their own data and check the formulae.
