Members' FAQs
Frequently Asked Questions (last updated January 2012)
Tiered Contributions Scheme membership and contribution rate My Pension Online Transfers Increasing my benefits Additional Pension AVCs (Additional Voluntary Contributions) Maternity Absence Nomination of a Spouse or Partner Provision of Death Benefits Pensions On Divorce and Pension Credit Members Leaving the TPS Retiring from the Scheme Converting Pension to a Lump Sum Working after retirement Reduction in annual allowance and lifetime allowanceOn 20th December 2011, the Government has made a Written Ministerial Statement on reform of the Teachers’ Pension Scheme. The Statement and further information on the latest position with scheme reform can be found at
http://www.education.gov.uk/schools/careers/payandpensions/b00198901/reform-of-the-teachers-pension-schemeTiered Contributions
Why are member contributions increasing?
Lord Hutton recommended that an increase in members’ contributions was necessary to address “the imbalance between employer and employee contributions” and to help maintain the sustainability of public sector pension schemes until full reforms can be introduced.
Is there any change to employer contributions?
The employer contribution rate was set at 14.1% in the 2004 Scheme Valuation, and is not affected by these changes.
Will I have to pay more for my pension?
By 2015, there will be an average contribution increase of 3.2% of a teacher’s salary, in order to reinstate a fairer balance between members’ and employers’ contributions.
The Government has consulted on the best way to manage the first stage, which will begin on 1 April 2012. The contribution tiers will be progressive and reduce the impact on the relatively lower paid as recommended by Lord Hutton. The consultation closed on 20 October 2011 and the Government published its response on 16 December 2011.Teachers will continue to receive tax relief on pension contributions which will reduce the impact of this on their take-home pay.
Will I be better off if I opt out of the new Teachers’ Pension Scheme?
By opting out of the Teachers’ Pension Scheme you would also lose the contribution your employer makes to your pension - currently 14.1%. This remains a very generous contribution to teachers’ pensions. If you do consider opting out of the scheme please seek independent financial advice first.
How much do employers and Government pay towards the cost of teachers’ pensions?
The employer contribution is currently 14.1 per cent of teachers’ salaries.
For teachers working in the maintained sector, the employer contribution is met from funding provided by Government.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topScheme membership and contribution rate
Q. Who can be a member of the TPS?
A. This is contained on the Member Guide in the section headed Joining the TPS.
Q. If I have more than one employer, should they all deduct contributions from my salary?
A. Yes, if you think one of your employers is not deducting contributions, please let them know immediately.
Q. How much are my contributions to the TPS?
A. Your contributions are 6.4% of your contributable salary. In addition your employer also pays a further 14.1%.
For a summary of the proposals to increased contributions, from 2012 please click here.
Q. If I have previous service in the TPS and opt-out, what happens to my previous service?
A. It will continue to remain to your credit.
Q. What is my Normal Pension Age (NPA)
A. This is the age at which you can normally take your retirement benefits. If you first joined the TPS after 31 December 2006, your NPA is 65. Otherwise it is 60.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topMy Pension Online
Q. If I register to your secure website what details can I access?
A. Our secure website enables scheme members to access a personalised estimate of retirement benefits (subject to having completed sufficient service to qualify for the payment of retirement benefits) based on the latest service and salary details that have been sent to Teachers’ Pensions by your employer. Additionally you can securely submit changes to your personal details (such as name and address), update your death grant nominees, or submit an election to opt out of the scheme (if you wish to stop contributing to the scheme so that your future teaching employment will be treated as non-pensionable).
Q. I am having trouble registering for the online service.
A. Please read the registration guidance notes as they provide assistance to members trying to register. If you still have problems after consulting the guidance notes, please email us at tpwebadmin@capita.co.uk quoting your full name and reference number. We can then provide you with further assistance.
Q. I have registered successfully for the online service but have not received my PIN.
A. Please email tpwebadmin@capita.co.uk quoting your full name and reference number, together with the answer to your personal question, and we will provide a PIN.
Q. I am having trouble logging in to the online service. I have registered previously but have lost/forgotten my details.
A. Please try using the Remind Me facility. You only need to enter at least one of your username, password or PIN, and following this you will need to confirm some identifying details. If this does not work, you may have locked your account. Please email us at tpwebadmin@capita.co.uk quoting your full name and reference number. We can then provide you with further assistance.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topTransfers
Q. Can I transfer my pension credit to the TPS from another scheme?
A. When you join the TPS, you can transfer pension credit from a previous scheme including an overseas scheme, as long as the previous scheme meets Her Majesty’s Revenue and Customs (HMRC) requirements and you apply for a transfer within 12 months of entering pensionable employment. A transfer application form can be found within the Forms & Resources page. For further information about transfers, see the Transfers In leaflet.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topIncreasing my benefits
Q. How can I maximise my benefits with the TPS?
A. You can buy extra pension or you can take out an Additional Voluntary Contribution (AVC). If you buy additional pension you can either pay a lump sum or have additional contributions deducted from your salary. For further information, see the Additional Pension leaflet. A calculator is available on the TP website that can be used to provide an indication of costs. If you want to take out an AVC the in-house provider is Prudential, but you can use other providers. For more information, contact the Prudential at
Teachers’ AVC Department
Prudential
Craigforth
Stirling
FK9 4UE
Telephone: 0845 0700 007
Website: www.pru.co.uk/teachers
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topAdditional Pension
Q. What is APB?
A. APB is Additional Pension Benefit. Details can be found in the Additional Pension leaflet. You can apply to purchase APB via My Pension Online, our secure site.
Q. If I retire before Normal Pension Age (NPA) what happens to my Additional Pension?
A. If you draw your benefits before NPA your Additional Pension will be reduced. If you draw phased retirement benefits, you can choose to draw benefits at first or second phase or on final retirement.
Q. What happens to my Additional Pension if I retire on Ill-health grounds?
A. If you are granted Ill-health retirement within one year of commencing payments your Additional Pension contributions will be refunded. If you are granted ill- health retirement more than one year after commencing payment of Additional Pension, you will receive an unreduced Additional Pension.
Q. If I purchase Additional Pension will that cover my dependants too?
A. Unless you specifically purchase dependants’ benefits as well as personal benefits, no Additional Pension will be paid after your death. Dependants include spouse, civil partners and nominated partners. Please note that there are no children’s pensions payable in respect of Additional Pension on death.
Q. Can my employer buy Additional Pension on my behalf?
A. Yes There is an overall limit on the amount of Additional Pension that can be purchased either by you or your employer. This limit is reviewed each financial year. If the salary used in the calculation of your benefits at retirement is reduced on account of the restricted salary provision, your employer also has the option, subject to your agreement, to purchase an amount of Additional Pension, provided that the application is made within 6 months of leaving pensionable employment.
Q. What is the effect of the Annual Allowance on the growth in my benefits?
A. If the growth in your benefits exceeds the Annual Allowance, you may be subject to an Annual Allowance charge.
The Annual Allowance for 2010/11 is £255,000 but the government has proposed that this is to be reduced to £50,000 for the tax year 2011/12. Under the new proposals, any increase in your TPS benefits including your APB together with large inputs into other registered pension arrangements will be assessed against the Annual Allowance.
You should therefore seek advice from an Independent Financial Advisor if are planning to make a lump sum payment to purchase Additional Pension to see if there are any potential tax consequences for you.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topAVCs (Additional Voluntary Contributions)
Q. Will I receive my teachers’ AVC benefits when I receive my TPS pension?
A. Payment of your teachers’ AVC benefits is not linked to payment of your TPS pension. You could access your teachers’ AVC at any time from age 55. If you have a Free Standing AVC arrangement you will need to contact the AVC provider as their rules can vary.
Q. How do I find out what benefits will be due from my AVC?
A. The In House AVC facility is administered by Prudential so you should contact them with any queries regarding the amounts that may become payable. The address for enquiries is:
Teachers’ AVC Department
Prudential
Craigforth
Stirling
FK9 4UE
Telephone: 0845 0700 007
Website: www.pru.co.uk/teachers
Q. Can I use my AVC fund to purchase additional pension?
A. No, it is not possible to purchase additional pension in the TPS with funds accrued under either an AVC, or Free Standing AVC arrangement, or by using a tax-free lump sum from another pension arrangement.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topMaternity Absence
Q. What happens to my service when I go on maternity leave?
A. If you receive Statutory Maternity Pay (SMP) or at least half pay then that period of maternity leave will be classed as pensionable employment. Where you do not receive SMP or at least half pay that period will not be counted as pensionable.
Q. What happens if I decide not to return to service after my maternity leave?
A. Your pensionable service will be considered to have ceased at the end of your SMP or after you have ceased to receive any pay. More information can be found in the fact sheet Maternity/Paternity.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topNomination of a Spouse or Partner
Q. I am not married and live with my partner what will they receive if I die?
A. Members, who are not married or have not entered into a civil partnership, are able to provide dependent benefits for ‘nominated’ heterosexual and same sex partners. There is a qualifying period of two years’ pensionable service from 1 January 2007. You can submit a nomination form online via My Pension Online, our secure site.
Q. If I have already retired and I am living with my partner, will they receive a pension?
A. Surviving partner benefits only apply to members who were in pensionable service on or after 1 January 2007 and retire after that date.
Q. If I nominate someone to receive a death grant, will they automatically receive a pension too?
A. Death Grant Nominations and Nominations to receive pension are entirely separate. This means that if a Death Grant Nomination is accepted the person nominated will not receive a pension unless you nominate them separately. Further information can be found in the leaflet Survivors and death benefits.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topProvision of Death Benefits
Q. What is payable when I die in pensionable service?
A. If you die in pensionable service a lump sum death grant of three times your average salary may be paid and a pension may be paid to your dependants. For further information about death grants and pensions, see the Survivors and death benefits leaflet.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topPensions on Divorce and Pension Credit Members
Q. I am a pension credit member – when I die will anyone be entitled to continue to receive my pension?
A. No, the pension will cease when you die.
Q. I am in receipt of a pension, my pension share has been processed – when will my pension be reduced?
A. Your current pension should be reduced within 4 months of TP receiving all the information to effect the reduction. If an overpayment of pension arises because of the order, it will be recovered from your future pension payments.
Q. I am a pension credit member. If I remarry, will my pension be stopped?
A. No, you will continue to receive your credit member pension.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topLeaving the TPS
Q. What happens to my pension when I leave pensionable employment?
A. If you leave pensionable employment there are four options open to you:
- Leave your pension credit in the TPS.
- If you are over 55 you can take actuarially reduced benefits.
- Transfer your pension credit to another form of pension provision.
- If you have not qualified for benefits you can take a repayment of your pension contributions.
When you leave, your employer should issue you with fact sheet, Leaving Pensionable Employment, which explains these options in more detail.
Q. How do I go about transferring my pension credit to another pension scheme?
A. If you want to transfer your pension rights out of the TPS, TP needs a formal request from your new pension provider. When TP receives the request, a guaranteed statement of entitlement will be issued, normally within three months. Once the signed acceptance and a request for the transfer value is received from your new provider, TP will issue the payment. If you are a pension credit member you cannot transfer out of the TPS.
Q. if I apply for a repayment will I get all of my contributions back?
A. The amount you will be repaid will be the contributions you have paid into the TPS together with compound interest added at 3% per annum. Deductions are made, one to pay back your entitlement in the State Pension Scheme and the other for tax. For further information, see the Leaving Pensionable Employment fact sheet.
Q. I have an existing Past Added Years (PAY) election, what happens to it if I leave pensionable teaching employment?
A. You have 3 months after your last day of service to clear any outstanding contributions unless you are retiring, in which case the outstanding contributions should be paid before you receive your retirement lump sum. Alternatively you can accept a service credit based upon the contributions you have already paid.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topRetiring from the scheme
Retirement conditions for Actuarially Adjusted Benefits (often referred to as Actuarially Reduced Benefits [ARB]), Age Retirement and Phased Retirement
Q. Is it possible to take a short period off without pay (as little as one day) and then become entitled to Actuarially Reduced (ARB) or Age Benefits?
A. It is not possible for an in-service member to take a "token break" in employment in order to become entitled to benefits in the TPS. As well as meeting the other retirement conditions, e.g qualifying service for benefits, there must be an actual cessation of employment.
If the individual is to be re-employed, this should be under a new contract of employment. Where a person is subsequently re-employed by the same employer, there should be a new contract with an expectation that the person would move to a different or changed role. If the person returns to substantively the same post, that should result from some form of recruitment process (e.g. open competition).
Q. Can I access my pension whilst in the same employment without the requirement for a cessation of employment?
A. Yes you can. You can access a proportion of your retirement lump sum and pension via phased retirement. There are certain conditions that must be applied before benefits can be taken – see below.
Q. What are the conditions for phased retirement?
A. For a member who remains in the same post and does not have a cessation of employment, phased retirement was introduced from 1 January 2007 so that a person can access at least 75% of their benefits whilst remaining in employment. This is subject to a reduction in their average salary of at least 20%, compared with an average of the 6 months salary prior to taking up the salary reduction. The reduction may be as a result of a reduction in hours, a switch to a lower paid post or a switch to a new non pensionable post, but within the educational sector. The reduction in the average salary must remain in place for a period of at least 12 months. The pension in payment is not assessed for abatement whilst the person is receiving phased retirement pension, but abatement may apply after the person is no longer in receipt of phased benefits.
Further details on phased retirement can be found in the Phased Retirement Leaflet.
Q. Are the entitlement conditions the same for ARB and Age?
A. Although the regulations require a break in employment of at least one day and a cessation of employment, ARB requires a break in both pensionable employment and employment which is no longer pensionable (known as ‘excluded employment’.)
The situation is slightly different for members who have attained Normal Pension Age (NPA), in that they can become entitled to ‘Age’ benefits if the member opts out of the scheme on or after NPA and enters excluded employment. They will become entitled to benefits from the date of entering excluded employment if this is on or after NPA (or in other words, the day after leaving pensionable employment). If a member applies for benefits some time after the payable date, the Age award is backdated to the payable date. The Age benefits payable are a retirement lump sum (if applicable) and pension, but the Age pension stops immediately, or at any point during the tax year depending on the amount of re-employment earnings. This is on account of the abatement provision.
Where can I find further guidance on retirement conditions?
This subject has been covered in TP News. The Spring issue of TP News set out the position regarding ARB under the heading of ‘Retirement conditions’:
TP News Spring 2011 (PDF)
The subsequent clarification regarding Age retirement is contained in the Summer issue below:
TP News Summer 2011 (PDF)
Follow this link to LGE bulletin 13, which also covers re-employment after ARB in slightly more detail:
LGE Bulletin 13
Below is LGE bulletin 15 which clarified the position regarding Age retirement:
LGE Bulletin 15
LGE Bulletin 17 provides further guidance:
LGE Bulletin 17
Information has also been posted on the Association of Colleges website, which can be accessed on the link below:
http://www.aoc.co.uk/
Q. Why do the regulations refer to a requirement to have at least a one day break?
A. The requirement to have at least one day without pensionable or excluded employment is particularly important in respect of members with more than one employment. All employments must have ceased at the same time in order to have a payable date. The member therefore becomes entitled to benefits on the day after leaving all such employment. Please note this does not negate the requirement for a cessation in the member's employment.
A. The abatement provision has been a feature of the Teachers’ Pension Scheme for many years, since at least the 1960s. The policy of abatement is to control the amount of money paid out of public funds. The intention was one of equity; to prevent a person receiving a combined income in terms of re-employment earnings and pension from public funds receiving more than an individual who has continued in employment without access to their pension.
Abatement applies to public sector pension schemes and is the reduction or suspension of a pension during a period of re-employment. If a retired member of the Teachers’ Pension Scheme returns to employment covered by the scheme or comparable employment in the UK (e.g. Scotland and Northern Ireland, the Channel Islands or the Isle of Man, known as ‘comparable British service’), then a person's pension and any Teachers’ premature compensation payable will be assessed for abatement. Re-employment in a post outside employment covered by the scheme (e.g. the private sector, or say the Civil Service) will not cause abatement of a member’s pension.
Abatement applies to members who have retired on Age or Premature grounds and those who have taken ill-health benefits prior to 1997 who are permitted to undertake a limited amount of work. As far as ill-health benefits are concerned, where other circumstances apply an ill-health pension will stop as a result of re-employment. Abatement does not apply to members who have taken Actuarially Reduced Benefits, (unless they have claimed unreduced benefits as well) or a member who is receiving phased retirement benefits.
Abatement can affect a person's pension if the re-employment earnings, pensions and premature retirement compensation exceed a person's index-linked ‘salary of reference’ in a particular tax year. Depending on the amount of re-employment earnings, if these exceed the earnings threshold, the pension will either cease immediately (6 April) or at some point during the tax year. Re-employed pensioners should complete a Certificate of Re-employment annually so that an assessment can be undertaken. A link to the Re-employment Certificate is set out below, but this can also be completed online by both the member and the employer through the secure area of the website My Pension Online.
Certificate of Re-employment Form (PDF)
Further details on re-employment can be found in the factsheet below:
Returning To Work Factsheet (PDF)
Q. Can I continue to work beyond NPA and accrue benefits in the scheme?
A. Yes. The scheme rules allow you to work beyond NPA and accrue benefits.
Q. How can I calculate the amount of lump sum I can take when I retire?
A. The actual formula is complex and so a modeller about the lump sum is available in the Calculators section.
Q. When do I apply for retirement benefits?
A. You should apply using the relevant form about four months before the date you wish to draw your pension. Which form you use depends on your circumstances when you retire. You can submit some retirement forms using My Pension Online, our secure site. For further information, see the Retirement – arrangements and planning leaflet.
Remember – it is your responsibility to make this application and to complete the correct application form.
Q. When will my benefits be paid?
A. Your benefits will be processed before the payable date or within 20 working days of receipt of your form whichever is the later date.
Q. Why can my salary be restricted at the point of retirement?
A. At retirement, two calculations are undertaken to see which average salary is the highest. The highest salary is the one used in the calculation of benefits, as described in the Average Salary fact sheet.
Where the best average salary used is the last 365 days, the growth in salary in the last 3 years prior to retirement is reviewed to make sure that the increase, year on year, does not exceed the greater of either 10% or £5,000 * per annum.
If you have had salary increases greater than 10% or £5,000, then your final average salary used in the calculation of benefits will be restricted. The £5,000 is reviewed each year.
The contributions in respect of the excess salary will be refunded to you and your employer, unless the alternative definition of the best 3 consecutive revalued average salaries in the last 10 is higher.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topConverting Pension to a Lump Sum
Q. What is commutation?
A. Commutation is converting part of your annual pension into a lump sum. Your pension will be reduced for all of your lifetime. This does not affect on your beneficiary’s long term pension. For every £1 per annum of pension that you give up you will receive an additional £12 of lump sum.
Q. Can I change my mind about the option to convert pension to lump sum?
A. No, it is important that you make the right decision first time. To help you there is a calculator available on the TP website. Please refer to the Pension and Lump Sum ready reckoner.
Q. I am already entitled to an automatic lump sum. Can I still convert some of my pension?
A. Yes provided you have service after 1 January 2007.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topPension benefits
Q. How is my pension benefit calculated?
A. Please refer to Your Pension Benefits for details of how benefits are calculated.
Q. How is the average salary calculated?
A. The Average Salary fact sheet describes the different methods of calculating average salary. The actual methods used will depend on the payable date of the award i.e. the date you become entitled to benefits. The average salary used to calculate your benefits will always be the best one depending upon your individual circumstances.
Q. What salary will be used to calculate my benefits if I work part time?
A. The full time equivalent of your salary will be used to calculate your benefits. Further information can be found in the fact sheet Working Part Time Before Retirement.
Q. Can I find out what my benefits will be on various retirement dates?
A. ‘Real time’ estimates of your benefits can be obtained from the website in the secure area. TP is unable to provide estimates of benefits that may become payable at a future date. You may however, use a calculator on the TP website to make your own projections.
Q. Are the benefits from the TPS increased?
A. They are reviewed each year.
Q. I have recently lost my management allowances and I will retire in a few years time. How will this affect my pension?
A. The average salary is based on: your salary in the last year or the average of the best three revalued consecutive years in the last ten years whichever is the better. This means that management allowances can still be used in your pension calculation. For further information about average salary, see the Average Salary fact sheet.
Q. Are there any restrictions to the amount of service that can be used in the calculation of my retirement benefits?
A. The maximum total pensionable service that can be used in the calculation of retirement benefits is 45 years.
Q. Does the TPS provide Ill-health retirement benefits?
A. If, before you reach NPA, you have become permanently unfit to serve as a teacher because of illness, Ill-health benefits may be paid. For further information see the Ill-health retirement benefits leaflet.
A. This is where you can take part of your pension and continue to work. You may take phased retirement without having a break in employment provided that your pensionable salary reduces by at least 20% for a minimum of 12 months. This could be because you have taken up a post of lesser responsibility or because you are working fewer hours. For further information see the Retirement – arrangements and planning leaflet. To obtain an online estimate of benefits please use the ARB / Premature Retirement Calculator.
Q. Do I need to discuss phased retirement with my employer?
A. Yes, you must discuss this with your employer to ensure that there is an appropriate post available. Your employer will also need to certify your phased retirement application form.
Q. What if my employer cannot accommodate my request for phased retirement?
A. If this is the case, you would need to seek employment with another participating employer in the TPS to meet the criteria. It would be up to your new employer to certify that the necessary salary reduction has occurred.
Q. What is the maximum percentage that I can draw on phased retirement?
A. The maximum is 75% of the benefits you have accrued in the Scheme, less any benefits you have already drawn from an earlier phased retirement.
Q. What happens if my salary breaches the 20% reduction in the first 12 months after phased retirement?
A. Your application will be void and your benefits will be suspended. There may also be an unauthorised payment charge from HMRC of 40% of the lump sum you have received.
Q. What death benefits are paid whilst drawing phased retirement benefits?
A. If you are in pensionable employment, you will receive 3 times your average salary less any lump sum paid on taking phased retirement. If you die within 5 years of drawing phased retirement benefits, you will receive the balance of the 5 years as a lump sum.
If you are out of service but drawing phased retirement benefits and you die within 5 years, you will receive the balance of the 5 years as a lump sum. The unclaimed portion of your pension will be paid as an out of service lump sum, equal to the retirement lump sum you would have received.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topWorking after retirement
Q. Can I return to teaching employment after retirement?
A. Yes, but you need to be aware that your earnings may affect the amount of pension paid to you. You must inform us in writing immediately you take up a teaching post.
You can complete a Certificate of Re-employment using My Pension Online, our secure site.
Q. How is my pension affected if I return to work after taking my retirement benefits?
A. The effect on your pension is determined by the type of retirement you took.
- If you retired on Ill health grounds your entitlement to receive pension ceases as soon as you start work.
- If you retire on Phased or Actuarially Reduced Benefits your pension will not be affected.
- If you are in receipt of Age or Premature Retirement benefits your pension may be affected. For further information see the Retirement – arrangements and planning leaflet and the fact sheet Returning to work after receiving pension benefits.
Q. Why have you asked me to complete a Certificate of Re-employment?
A. We have received information that indicates you may be re-employed after your retirement and we need to assess if this affects your pension. Irrespective of the number of days you have worked you must submit a fully completed certificate to ensure that your pension has not been overpaid. The form provides all the information required to enable TP to determine if your pension is affected by your re-employment. Failure to complete the form could result in an overpayment of your pension that you will be required to repay.
Q. If I am in receipt of Premature Retirement which my employer increased my pension; is that affected by my re-employment?
A. If you are in receipt of Premature Retirement your employer will have paid mandatory compensation. In addition your employer may have agreed to increase your pension as compensation for your early retirement. In either or both of these circumstances the value of those payments will be taken into account when assessing the impact of your re-employment on your pension.
Q. I have already completed the Certificate of Re-employment form, do I need to omplete another?
A. Certificate of Re-employment needs to be completed for every tax year in which you are re-employed. These should be completed at the beginning of the tax year. You must also complete one if there are any changes to your salary or working pattern.
Q. What can I earn without my pension being affected?
A. Your earnings plus your annual pension must not exceed your best salary in the average salary period used in the calculation of your benefits. This amount is subject to review each year, there is a re-employment ready reckoner calculator on our web site.
Q. Will I receive any further retirement benefits after I cease my re-employment?
A. If you started a new contract on or after 1 January 2007, you will automatically become a member of the TPS irrespective of whether you work full- or part-time and you will start to accrue service towards further benefits unless you have opted out. If you have taken all of your accrued benefits from the TPS, you will need to complete a further one year qualifying period to claim additional pension benefits.
Q. What action do I need to take if I do not want to rejoin the TPS during my re-employment?
A. If you do not wish to contribute to the Scheme you will need to formally ‘opt out’ of the scheme. You can do this via My Pension Online, our secure site. You are still required to complete a Certificate of Re-employment form as your pension may still be affected by your earnings.
If this did not answer your query, please check our FAQs index or Contact us.
Back to the topReduction in annual allowance and lifetime allowance
HMRC introduced two pension allowances on 6 April 2006, one to restrict tax relief on pension growth and the other to restrict the benefits taken from a scheme, before giving rise to additional tax charges.
Both of these allowances were reduced in the Finance Act 2011. The changes to these pension allowances are being made by the Government to ensure that pensions tax relief remains fair and affordable. The Changes are set out below:
- The annual allowance (AA) is a limit of the tax free growth or input you can have in all registered pension schemes in a tax year. If the AA is exceeded, this gives rise to an AA charge. The AA for the tax year 2010/11 was £255,000 but this has now reduced to £50,000 for the tax year 2011/12. There is, however, the potential to utilise unused AA from the previous 3 years.
- The lifetime allowance (LTA) is the maximum amount you can take in pension benefits during your lifetime from all pension schemes before an additional tax charge is incurred. If the LTA is exceeded, you will be subject to the LTA charge. The LTA for the tax year 2011/12 is £1,800,000, but will reduce to £1,500,000 in the tax year 2012/13.
HMRC has enabled members who may be adversely affected by the reduction in the LTA to apply for a new type of transitional protection, known as Fixed Protection. You will only be able to apply for Fixed Protection from HMRC until 5 April 2012. Please note there are stringent conditions which apply to Fixed Protection and consequently we would recommend you seek independent financial advice.
Further information including Q & A's can be found in the link below:
Letter to members - Q & A's on reduction in annual and lifetime allowance (PDF)