Teachers' Pensions
Phased Retirement

Phased Retirement

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Phased retirement was introduced on 1st January 2007 with the purpose being that members who are reducing their earnings due to part time work or a reduction in responsibilities will be able to withdraw part of their pension to substitute their loss of income.

The maximum a person can withdraw from the Scheme is up to 75% of pensionable benefits. The percentage you choose to withdraw will be put into payment with effect from the first day following the date your earnings reduce. The remaining benefits left in the Scheme continue to grow as you carry on working and contributing on a reduced salary.

To be eligible to claim Phased Retirement, you must be between the age of 55 and 75. The application for phased retirement must be received by Teachers’ Pensions within 3 months of the salary reduction taking place and the reduction in salary must be of at least 20% in comparison with the previous twelve months averaged earnings. This reduction must be maintained for at least twelve months (allowing for the standard annual increase).

Where an application is made for a pension to be paid before normal pensionable age, the pension paid will be subject to an actuarial reduction. More information on Early Retirement factors can be found in our “Factors and guidance” section.

How further phased retirements are calculated

With final salary, the percentage of benefits you wish to take is applied to the accrued reckonable service as at the relevant date. For the second phased retirement the percentage is applied to the total accrued reckonable service as at the new relevant date. That’s the total service in its entirety, both that accrued before the first phased retirement and that accrued during the first phased retirement. We then deduct from this the amount of service used in the first phased retirement to arrive at the total amount of service to be used in the second phased retirement. We do not simply apply the percentage against the remaining, unused accrued service.

For example, a member with 40 years of reckonable service takes 75% of their benefits at their first phased retirement. The first phased retirement benefits will be calculated using 30 years of reckonable service. 2 years later the member decides to take a further 75% in a second phased retirement. The calculation for this is 75% of 42 years, from which we deduct the original 30 years, which equals 31.5 years minus 30 years.  Hence the benefits for the second phased retirement will be calculated using 1.5 years of reckonable service.  This is because members can only ever take 75% of the their total benefits during phased retirement, or conversely must leave at least 25% of their benefits unused before taking their final age, early or ill-health retirement.

With career average, the percentage of accrued earned benefits taken in the first phased retirement is deducted, and future phased retirements are applied against the reduced, although still growing, accrued earned pension as and when the further phased retirement is taken.

Final salary member

If you’re in the final salary arrangement you can take two phased retirements before finally retiring.

Career average member

If you’re in the career average arrangement you can do this three times before finally retiring but only two of your phased retirements can be before age 60.

Benefits in both final salary and career average

If you have benefits in more than one arrangement you can choose to take different proportions of your final salary and career average benefits.

Last Updated: 12/10/2018 12:38

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