Teachers pension Flashcards
What is it
The Teachers’ Pension Scheme is a Defined Benefits pension scheme available to teachers across England and Wales. In return for monthly contributions from you and your employer, the Scheme provides an index-linked government backed annual pension when you come to retire, as well as insurance benefits if you have to leave due to ill-health or death.
Accrual
As a newly qualified teacher, you’ve entered the Scheme as a Career Average member. This means that you’ll accrue benefits each year based upon 1/57th of your pensionable earnings (including any overtime). We increase the benefits accrued in your ‘pension pot’ by what’s known as Consumer Price Index (CPI) + 1.6% each year you’re active in the Scheme.
From day one you’ll qualify for death benefits, covering your loved ones should the worst happen. You’ll also have the option to make the most of increasing your pension by taking advantage of the Flexibilities available to you.
Once you’ve built up 2 years of qualifying service, you’ll be able to view a personalised Benefit Statement via your My Pension Online account.
Normal pension age
The Normal Pension Age (NPA) of a member in the Career Average arrangement is either your State Pension Age or age 65, whichever is the later date.
Buy out
Buy Out is one of the three Flexibilities available to Career Average members that allows you to increase the amount of pension benefits available to you at retirement. This option allows you to Buy Out the standard rate of reduction applied between age 65 and your Normal Pension Age should you decide to retire early.
You only have one opportunity to ‘Buy Out’ the reduction and this must be done within six months of you first entering the Scheme. Contributions towards the Buy Out option last throughout your career, unless you decide to revoke your election.
Opt out
We understand that you might decide to opt out of paying contributions and make your own arrangements. We would urge you to seek independent financial advice when making such important decisions, and consider the cost of providing similar benefits to those offered by the Teachers’ Pension Scheme. If your opt out is received within the first 3 months of starting your teaching contract, your election will be backdated and your employer will refund any contributions taken within this time. You can also opt out at any time after this point, but your election will be effective from the first day of the following month that the opt out form is received.
Before you opt out, we’d encourage you to take a look at the benefits included in being a member of the Teachers’ Pension Scheme. You can find out more in our “Opt in and opt out” section.
If you’d still like to opt out, you can complete the application form online. And remember you can opt back in anytime you’d like.
