Existing scheme members New scheme members
Normal Pension Age (NPA) remains at age 60 (no actuarial enhancement for working beyond age 60). Normal Pension Age (NPA) is age 65 (actuarial enhancement for working beyond age 65 has been introduced).
Some changes affect existing scheme members and those who join on or before 31 December 2006. The changes affect new members from 1 January 2007 and existing members who have a break in service of more than five years.
Actuarially reduced pension benefits are available from age 55. Reduction is on the basis of NPA 60. Actuarially reduced benefits are available from age 55. Reduction is on the basis of NPA 65.
By April 2010, the Minimum Retirement Age (MRA) will be increased to 55. The Minimum Retirement Age (MRA) is age 55.
Pension benefits continue to be calculated as 1/80th of pensionable salary for each year of pensionable service. Pension benefits are based on 1/60th of pensionable salary for each year of pensionable service.
Pension lump sum is calculated as a minimum 3/80ths of final salary for each year of pensionable service, but there is more choice to take a higher tax-free lump sum, up to 25% of fund value, and a lower amount of pension. There is no automatic pension lump sum however, there is the option to take a tax-free lump sum, up to 25% of fund value, by surrendering £1 of pension for £12 of lump sum.
There is the facility to buy up to £5,000 of additional annual pension. Facility to increase pension by buying past added years/current added years is no longer available (existing contracts honoured). An option to increase pension provision by buying up to £5,000 of additional annual pension.
Pension benefits are based on the better of your pensionable salary in the last year or the average pensionable salary of the best three consecutive years in the last ten (re-valued in line with the Retail Prices Index (RPI)). Pension benefits are based on the better of your pensionable salary in the last year or the average pensionable salary of the best three consecutive years in the last ten (re-valued in line with the Retail Prices Index (RPI)).
That means the provision to step down to a post of lesser responsibility is no longer available (existing contracts honoured). Not applicable for new entrants.
The death grant has been increased from two times pensionable salary to three times pensionable salary. The death grant is three times pensionable salary.
Spouses’, surviving civil partners’ and nominated dependent partners’ pensions are payable for life. Spouses’, surviving civil partners’ and nominated dependent partners’ pensions are payable for life.
From 1 January 2007, employee contributions rise from 6% to 6.4% of salary. Employee contributions are 6.4% of salary.
From 1 January 2007, employer contributions rise from 13.5% to 14.1% of salary. Employer contributions are 14.1% of salary.
There are two tiers of ill-health retirement benefits – Total Incapacity Benefit (TIB) and Partial Incapacity Benefit (PIB). There are two tiers of ill-health retirement benefits – Total Incapacity Benefit (TIB) and Partial Incapacity Benefit (PIB).
Automatic scheme membership for part-time teachers on change of contract introduced, unless they opt out. Those who are currently part time and not in the scheme still have to opt in. All part-time teachers automatically become a member of the scheme unless they opt out.
Members are able to draw some or all of their pension benefits while continuing to work as a teacher in a reduced capacity taking at least a 25% reduction in salary. Members are able to draw some or all of their pension benefits while continuing to work as a teacher in a reduced capacity taking at least a 25% reduction in salary.