Estimate of Retirement Benefits FAQs
Your State Retirement Pension Forecast
Important information:
- This is an estimate, not a guarantee of the amount of State Pension, which you might be paid in the future and is based only on your National Insurance record.
- We have looked at the most recent National Insurance record we hold on you and assumed that your future contribution record, up to state pension age, will be similar to this.
- The total State Pension includes the basic State Pension, any additional State Pension (including State Earnings-Related Pension Scheme (SERPS) pension, State Second Pension and takes account of any adjustments for contracting out), any Graduated Retirement Benefit and shared additional pension you may be entitled to.
- It does not include any Pension Credit, which you may be entitled to. Pension Credit is based on your circumstances at the time of claiming.
- If the information we have about you is wrong, this estimate may also be wrong. If you think that the details in this State Pension forecast are incorrect or you have another enquiry about this State Pension forecast, please contact the Department for Work and Pensions (DWP) dedicated phone line for the Retirement Pension Forecasting Team on 0845 3000 168.
- If your circumstances change or the law changes, the amount we estimate you will receive may change. By law, the Government must review the amount of State Pension every year.
- If you receive more than one combined pension forecast statement, because you have more than one occupational or private pension, you should only count your State Pension once. Always use the most recent forecast to predict your expected State Pension.
The leaflet ‘Your Pension Statement’(CPF5) gives more information about your State Pension forecast and can be obtained by visiting www.thepensionservice.gov.uk/pensionforecast
When State Pension Benefit Details Will Be Shown On The Estimate Statement:
The estimate of retirement benefits statement will not only show benefits accrued under the TPS but will also show, if available, personal benefits accrued under the state pension scheme. If, however, this is your first estimate from TP your state pension details will not be included. You need to be aware that to enable us to do this we need to obtain information from DWP and in doing so need to supply them with certain information about you. If you do not wish us to obtain State Pension information from DWP then you must notify us within one month of us issuing your first estimate, otherwise we will collect your State Benefit information and include it in your next estimate.
PLEASE NOTE:
If you have informed us not to obtain your State Pension details from DWP the details will show as N/A. N/A will also be shown if State Benefit details could not be provided by DWP or we have not yet approached them for your details – to obtain such details you may contact DWP on 0845 3000 168.
Estimate Of Retirement Benefits -
Frequently Asked Questions and Important Information:
Lifetime Allowance / Increase In Annual Benefits
Q. What is average salary?
A. This is the salary used to calculate your benefits when you retire.
Q. Is it always calculated in the same way?
No, it depends on when you retire.
If you are out of service and your last service was before 1 January 2007, then only one calculation is necessary.
If you are retiring on or before 31 December 2008, then it is the best of three different calculations.
If you joined the scheme after 1 January 2007 or are retiring after 31 December 2008, then it is the better of two different calculations.
Q. What method is used if I left service before 1 January 2007?
The highest amount of full salary for any consecutive 365 days of reckonable service, whether continuous or not, during the last three years of reckonable service.
Reckonable service is those years and days that count towards your pension benefits.
Q. What method is used if I was in service before 1 January 2007 but retire before 31 December 2008?
A. The best of the following calculations will be used.
The highest amount of full salary for any consecutive 365 days of reckonable service, whether continuous or not, during the last three years of reckonable service.
The salaries for the last ten calendar years are increased using the Retail Prices Index (RPI). Then the average of the best consecutive three years’ re-valued salaries in those ten calendar years is used.
The average salary over the last 365 pensionable days before the date of retirement.
Q. What method is used if I retire after 31 December 2008?
A. The better of the following calculations will be used.
The salaries for the last ten calendar years are increased to current day value using the RPI. The average of the best consecutive three years re-valued salaries in those ten calendar years is used.
The average salary over the last 365 pensionable days before the date of retirement.
Q. Are there circumstances when the average salary may not be calculated as above?
A. There are circumstances where this may not be the case, for example where you have had a significant increase in salary during the period. For more information you should contact your employer or click here.
Q. How are my benefits calculated?
A. Your benefits are based on pensionable service and average salary.
- Final average salary for full-time teachers - the average salary is calculated based on full-time salary rates during the average salary period (as mentioned above), ignoring gaps.
- Final average salary for regular part-time/supply teachers – the average salary in respect of regular part-time teachers is calculated in the same way as for full-time teachers, i.e. using the full-time salary rate for the full period of the pensionable part-time employment, not just the days actually worked in the part-time period.
- Final average salary for irregular part-time/supply teachers – the average salary is based on the full-time equivalent salary rate during the period of part time pensionable employment (ignoring gaps). This means only the actual days worked during the period of the part-time/supply pensionable employment are used, not the full period of part-time/supply pensionable employment. E.g. a teacher who works 50% during a year would have their average salary calculated over a two year period to obtain 365 pensionable days.
If you were a member of the TPS before 1 January 2007, your pension is 1/80th of the average salary for each year of pensionable service. Individual days count as 1/365th of a year. Your tax-free lump sum is three times your pension.
If you joined the scheme on or after 1 January 2007, your pension is 1/60th of the average salary for each year of pensionable service. Individual days count as 1/365th of a year. You are not automatically entitled to a lump sum but can convert part of your pension to create a lump sum.
Regardless of when you joined, if you have pensionable service on or after 1 January 2007, you may convert up to 25% of your ‘fund value’ to provide a tax-free lump sum by surrendering £1 of annual pension to realise £12 of lump sum.
Q. What is a hypothetical calculation and when are such benefits put into payment?
A. An award of teachers’ pension benefits is normally calculated as mentioned above. However, if a member has a break or breaks in pensionable service after 1.4.1972 and has sufficient service to qualify for retirement benefits at the break a hypothetical calculation is done. This calculation is based on all of the members pensionable service* (in the same way as the normal calculation of benefits) but uses an average salary calculated at the break with appropriate pensions increase applied to the benefits from the deemed date (the day after the average salary period used). These benefits are then compared with the normal calculation of retirement benefits and the most beneficial are put into payment.
Note that the hypothetical average salary will be calculated as mentioned above depending upon if the break is before or after 1 January 2007.
This calculation is only done at the point of retirement.
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Q. Why does my teaching service have an end date of 31 March?
A. Employers submit details of teaching service annually to Teachers’ Pensions (TP). In all cases where the teacher has not left their employment during the year the census date of 31 March is entered into members’ records.
Q. I think my service and salary information is incorrect, what should I do?
A. If the service is incorrect because you have had contributions repaid or previous service has been transferred in or out of the scheme you should contact TP. Otherwise you should contact your relevant employer(s) to check the details they hold are correct and check if they have supplied any amended or updated information to TP. If the information has not been supplied to TP, please encourage your employer to provide the information as soon as possible. If the information has been supplied but does not appear on your estimate please check your record periodically on the website and contact TP on telephone number 0845 6066166 if it is not updated. At retirement your membership history will be scrutinised to ensure benefits are calculated on the correct service. Please note that changes to your service and salary details can only be made upon written confirmation from the employer.
Q. Why are ‘Days Out’ shown on my estimate?
A. These are days that have been notified to us by your employer(s) as not counting for pension benefits. We have not been given the reason but it may be because you had unpaid leave or were employed on a part-time/supply contract. Your employer should be able to provide you with the reason.
Q. How is part-time/supply service calculated?
A. The amount of pensionable service credited to you for any period of eligible part-time/supply service is calculated by comparing the amount of salary received with the corresponding annual full-time rate of salary. i.e.:
Salary paid (£10K)
_______________________ x 365 = days of pensionable service (122 days)
Full time annual salary (£30K)
Q. Where can I obtain a projection of what benefits I may receive at retirement?
A. Teachers’ Pensions is unable to supply benefit estimates based on projected service and salary details. You can calculate an estimate yourself based upon your own assumptions using the retirement calculator that is available on this website under the section ‘Teachers’ Guide’.
Q. When can I normally retire?
A. If you were in pensionable service prior to 1 January 2007, your Normal Pension Age (NPA) is 60.
If you entered pensionable service for the first time on or after 1 January 2007, your NPA is 65.
If you return to pensionable service after a break of more than five years, your NPA will still be 60 in respect of your earlier service, but it will be 65 for your future service.
Transitional Arrangements:
If a member was in pensionable employment before 1 January 2007 and returns to pensionable employment after a break of more than 5 years, their future service will have a Normal Pension Age (NPA) of 65. However if in any rolling period of 365 days during the 5 year break such a member returns to pensionable employment for a minimum of 60 days or 30 days’ reckonable service (i.e. the equivalent of being employed part-time for 60 days at 50%), they would retain a NPA of 60.
For example, if someone with service prior to 1 January 2007 leaves pensionable employment on 31 March 2009, and subsequently was in pensionable employment for less than 60 days or accrued less than 30 days reckonable service in any 365 day rolling period, then from 2 April 2014 all future service would have a NPA of 65. All service prior to 2 April 2014 would have a NPA of 60."
Exception: All members currently out of service who return to pensionable employment on or before 31 December 2007 will retain their NPA 60 regardless of how long their break in service. However any subsequent break in service of more than 5 years will result in a NPA of 65 as set out above.
Q. What is the effect on my benefits if I leave before normal pension age?
A. Provided you are aged 55 or over you may retire on the grounds of Actuarially Reduced Retirement or Phased Retirement. When such benefits are paid factors are applied to the retirement pension and lump sum to take account of the early payment. Again, based on your assumptions the retirement calculator on the website can be used to provide such estimates of reduced benefits.
Retirement benefits may also become payable if, having reached 50, your employer certifies that your pensionable employment has been terminated prematurely. This is not automatic. Your employer must agree to the payment of premature retirement benefits and, in doing so, must agree to pay a statutory share of your retirement benefits. If you leave pensionable service before age 60 and decide not to apply for actuarially reduced benefits, your entitlement would be frozen until age 60 and indexed linked from your leaving date to the payable date.
Q. What are the different types of retirement?
A. Ill health: where you are no longer fit enough to continue teaching.
Premature: where you are aged 50 or over and your employer releases you on grounds of redundancy or in the interests of the employer’s functions.
Actuarially Reduced Benefits (ARB): where you leave pensionable employment, choose to take all of your retirement benefits actuarially reduced and you are aged 55 or over but under NPA.
Phased retirement: where you are aged 55 or over and choose to take part of your retirement benefits and remain in employment in a reduced capacity e.g. by going part time. These benefits will be actuarially reduced if you are under NPA.
Age: benefits taken at NPA or later.
Further details are available in the leaflet Retirement – arrangements and planning
Q. Are Family Benefits payable?
A. Family benefits may be payable providing you have sufficient service covered for family benefits to qualify. Further details are available in the leaflet Survivor and Death Benefits
Q. What options are available to me to increase my pension provision?
A. As a member of the scheme, you are already making important provision for when you retire. However, you still need to consider whether your pension is likely to be enough or as much as you had envisaged and make any additional provision that may be necessary to achieve your pension expectations. There are a number of options available and you will find greater details elsewhere on this website. These are highlighted below.
- Transferring - transferring previous pension credit into the TPS. Applications must be made within 12 months of entering pensionable employment.
- Buying Extra Pension - you can either pay a lump sum or have additional contributions deducted from your salary.
- Additional Voluntary Contributions - an arrangement with Prudential, the TPS appointed Additional Voluntary Contributions provider, or another insurance company providing an annuity at retirement known as Freestanding Additional Voluntary Contributions (FSAVC).
- Reinstatement - repay contributions previously withdrawn before 01/06/73. It is not possible to repay contributions withdrawn after that date.
Q. Is my Past Added Years (PAY) service included in the statement?
A. All PAY that you have already paid for in full, including any PAY for which you are still purchasing by monthly deductions will be included in your estimate. However, if at retirement you have not fully paid for your PAY your benefits will be less. At retirement, or indeed upon leaving pensionable employment, you will have the option to take a paid up credit for the amount of PAY you have paid for at the date of leaving/retiring or alternatively to pay the outstanding contributions to enable the full amount of PAY to be credited. If you should leave pensionable employment and have a PAY election that has not been concluded please contact TP.
Please note: If you worked part time or had days without pay during the PAY payment period the amount of PAY to be credited to you will need to be adjusted accordingly once the payment period has concluded. PAY on your statement that is shown as “PAY concluded - service credit not verified” may need adjusting in this way, if so your benefits will be less than those quoted.
Q. Do I need to make a death grant nomination?
A. Death grants are paid to the person or persons nominated by you to receive this payment.
- If there is no nomination, your legal spouse or civil partner/nominated partner will receive it.
- If none of these, the payment will be issued to whoever is administering your estate.
You may make or change your nomination at any time and are advised to regularly review this.
Q. How do I make a death grant nomination?
A. A death grant nomination can be made securely online – for further details click here.
Q. Who will receive the potential family benefits pension?
A. This will be payable to your legally married spouse or registered civil partner. If you are unmarried and do not have a registered civil partner, you can nominate your partner to receive the family benefits pension after you die.
For further information see the fact sheet Partner benefits.
Q. What does the term ‘Deferred Member’ mean on my statement?
A. Teachers who leave pensionable teaching employment before normal retirement age and leave their benefits in the scheme are called ‘Deferred Members’. The value of these benefits from the last day of teaching service is increased in line with the Retail Price Index.
Q. As a ‘Deferred Member’ would a death grant become payable if I died before receiving my retirement benefits?
A. Yes. In the event of death before payment of retirement benefits an amount equivalent to the basic tax free lump sum (3/80ths of average salary multiplied by pensionable service), with pensions increase applied up to the date of death would be payable.
Q. What does the term ‘PI review date’ mean?
A. This is the date of the latest review of the Pensions Increase Factor tables undertaken by the Government Actuary’s Department. This review is undertaken each April. Because your pension is based on final pensionable salary it will generally grow in line with inflation.
Q. Why does the word ‘other’ appear on my statement under employer?
A. This represents service counting for benefits that has been undertaken with an employer that either no longer participates in the TPS or the identity of the employer has since changed.
Q. What does the term ‘Lifetime Allowance’ mean?
A. The Finance Act 2004 introduces a single tax regime that will apply to all UK tax-privileged pensions from 6 April 2006 (A Day). This new regime introduces a Lifetime Allowance, which is the total allowable value of all privileged pensions from all sources. If the value of your total pensions, within the current limits, exceeds the Lifetime Allowance, you will have to pay additional tax, called a recovery charge, of 25% on the excess. For the tax year 2006/2007 this allowance is £1.5 million. Persons who are entitled to or are prospectively entitled to benefits in excess of this level may apply to protect existing benefits provided they are within current Inland Revenue limits as at 5 April 2006. If there is a possibility that you will require protection, please contact TP for further information. Further information on this is also available on our website please click here.
With effect from April 2006 the estimate of retirement benefits will provide you with details of the value of your benefits available from this scheme as a proportion of the Lifetime Allowance.
We recommend that you seek independent financial advice to help you understand how the new rules will affect you personally.
Q. How is the increase in annual benefits (for Annual Allowance purposes) calculated?
A. With effect from April 2007 the amount of annual pension (excluding the State Pension) and lump sum shown on your estimate will be compared with the same as accrued 12 months earlier.
The difference in the amount of annual pension is multiplied by 10. Added to this is the increase i.e. the difference in the basic tax free lump sum to give the total increase in annual benefits. You will need to know of this amount to ensure that you have not exceeded the annual allowance. For the tax year 2006/2007 the annual allowance is £215,000.00.
Q. Why are the Annual Increase details blank?
A. The estimate of retirement benefit statements have already been amended to cater for the Life Time Allowance and the Increase in Annual Benefits although they will not display any information in relation to the Annual Increase until April 2007.
Q. How do I receive my retirement benefits?
A. The process for paying retirement benefits requires you, the scheme member, to apply for these benefits. This is a formal process and application forms can be obtained from your employer. Scheme members who are not in teaching employment at the time of retirement can obtain an application form from TP. Further information can be found in the leaflet Retirement –arrangements and planning.
IMPORTANT INFORMATION
NEW IMPROVED ONLINE SERVICES FOR SCHEME MEMBERS
Our online services for scheme members have been enhanced. The former “Teacher Benefit Statement” site, which contained a static replica of estimate statements previously issued in hard copy format, has been replaced by “Teachers' Pensions - My Pension Online”. This new interactive service provides members of the TPS with secure access to a range of information about their pension, including the facility to obtain a real-time estimate statement based on information held on our records at the time you view your “Estimate of Retirement Benefits”.
Access to an online estimate statement cannot be guaranteed. If you receive a message indicating that information is not currently available for you to view online, and you have completed sufficient service to qualify for an award of retirement benefits at normal retirement age, please use the “Contact Us” option within My Pension Online to ask for information to be sent to you by conventional post.
CHANGES TO PERSONAL DETAILS
You should immediately notify TP of any changes to personal details. Also, if your National Insurance (NI) Number shown on the front of the estimate is incorrect please advise TP of your correct NI number as soon as possible. You may contact TP on telephone number 0845 6066166 (this is a BT local call rate number) or alternatively 01325
745000 (this is a standard national rate number).
Please note that any data we hold on our records about you may be used for statistical purposes.