Teachers' Pensions
FAQs

Some questions keep being raised. So we've compiled a list of the most frequently asked ones - along with their answers.

Popular Questions

Q How is average salary calculated for a deferred members Final Salary benefits?

A

If you've been in pensionable employment on or after 1 January 2007 your average salary will be the better of:



  • Your final full-time equivalent salary averaged out over the last twelve months of service

  • An average of your best three re-valued years salaries of the last ten years of pensionable employment (Revaluation uses the Consumer Price Index).


If all your pensionable employment is before 1 January 2007 then it will be an average of the best salary over any 12 months out of the last three years before you left service. If you're part-time we use the full-time equivalent to calculate your average.


However, if you have had a break in service (and at that point had sufficient service to qualify for a pension and lump sum,) retirement benefits are calculated using your average salary at the break. These benefits are then brought up to current day value from the date of the break. These increased benefits are compared with the benefits calculated in the 'normal' way with the better of the two being put into payment. In most cases this alternative or 'hypothetical' calculation uses the whole of the reckonable service, but if the salary at the break is higher than at retirement, only the reckonable service up to the break is used. This is known as a restricted hypothetical.

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Q What if I left service after 1 April 2015?

A

If you were a protected member in the final salary arrangement and return after a break of less than five continuous years then you will remain in final salary on your return to pensionable employment.


If you were a protected member in the final salary arrangement and have a break in service of more than five continuous years, then you'll enter the career average arrangement on your return to pensionable employment but, your existing benefits will remain in final salary.


If you had no protection but return after a break of less than five continuous years then you will enter the career average arrangement but will have a link between the salaries you earn in career average and your final salary benefits.


If you had no protection and return after a break of more than five continuous years you will enter the career average arrangement. If you had both final salary and career average benefits when you left service then your final salary benefits will be calculated using an average salary based on your salaries at the start of the break.

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Q As a deferred member can I buy any of the Scheme flexibilities?

A

No, scheme flexibilities can only be purchased by members in pensionable employment.


If you return to pensionable employment in the career average arrangement then you'll have one month to elect to purchase Faster Accrual.


If it's the first time that you're the entering the career average arrangement then you'll have six months to decide to purchase Buy Out. Buy Out allows you to make contributions to reduce any adjustments to your benefits if you decide to retire before reaching your Normal Pension Age.


You can decide at any time after returning to pensionable employment to purchase Additional Pension either for yourself and/or for your spouse or partner.

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Q What is average salary?

A

The [final] average salary is the salary we use when calculating Final Salary benefits when you retire. There are two different methods for calculating the average salary and we will use the method that provides you with the most beneficial result. The two methods used are:


-The salaries for the last ten pensionable years are increased at each salary change to current day value in line with inflation. The average of the best consecutive three years re-valued salaries in those ten years will be used;
-The pensionable salary received in the last 12 months of employment before the date of retirement.


But if you have no pensionable service on or after 1 January 2007, your average salary will be the best 365 days in the last 1095 days before you left service.


If you're a transition member and moved from the Final Salary to Career Average arrangement then, as long as you've not had a single break of more than 5 years you have Salary Link. This means that when you retire the salaries you've earned during your Career Average service will be used when determining the best average salary for your Final Salary benefits. But if you have had a single break in service after 1 April 2015 of more than 5 years then only the salaries in your Career Average service up to the start of that break will be used.

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Q Are there any restrictions to the amount of service that is used in the calculation of my retirement benefits?

A

The maximum total pensionable employment that can be used in the calculation of Final Salary pension is 45 years. This restriction doesn't apply in the Career Average arrangement.


If you continue teaching after your 75th birthday, any service after that date is not treated as pensionable but your retirement benefits are payable from your 75th birthday.

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