Karl - Career Average

Date of Birth: 31 October 1954

Date entered the Scheme: 1 May 2015

Current NPA: Not applicable

Age on 31 March 2012: Not applicable

Member type at April 2015: Not applicable

  • Answer:

    When Karl entered the Scheme on 1 May 2015 his NPA was 66. Karl plans to retire on 31 October 2020, when he reaches his NPA and state retirement age of 66.

  • Answer:

    Karl will build up career average benefits which accrue at a rate of 1/57th of his salary each year. Those benefits will be subject to indexation each year. He’ll not receive an automatic lump sum but can convert part of his pension to receive a lump sum.

    Karl had previously worked in the private sector and transferred his accrued pension benefits from his previous scheme into the Teachers’ Pension Scheme in 2015. This transfer has purchased benefits in the career average arrangements.

  • Answer:

    Karl has increased his benefits by transferring into the Teachers’ Pension Scheme his previous benefits from a private sector scheme.

    In career average and while he is in service, he can make purchases of additional pension and also has the choice to pay higher contributions to purchase a faster accrual rate or buy out. These flexibilities are subject to an overall maximum limit.

    Additional pension

    While he is in service Karl can purchase additional pension, he can buy it for just himself or for himself and his partner or spouse. Karl can pay for it by a lump sum or having deductions taken monthly from his salary.

    Faster accrual

    Karl can make an annual election to purchase faster accrual. He needs to make an election within one month of taking up employment. In future years Karl needs to make his election before the end of March each year. The accrual rates Karl can choose from are 1/55th, 1/50th or 1/45th.

    Buy out

    If Karl wants to purchase buy out he has six months from taking up employment to decide, after that he cannot elect to purchase this flexibility. Buy out is where a member, like Karl, who has an NPA over 65 in the career average arrangements and wants to take his benefits before his NPA, can pay extra contributions to reduce the adjustments that will be made to his benefits.

  • Answer:

    Karl plans to retire on 31 October 2020 when he reaches his NPA and state retirement age of 66.

    If he leaves before then and takes up other employment, he may be able to transfer his benefits to his new employer’s pension scheme or he could choose to leave them in the Teachers’ Pension Scheme until he reaches age 66.

  • Answer:

    If Karl becomes ill and cannot teach anymore he may be able to receive his benefits straight away. If Karl is unable to undertake any work he may have his benefits enhanced. The enhancement is calculated using half of the service Karl could have completed before reaching NPA and his salary at retirement.

    Karl may decide not to apply for ill-health benefits but agree with his employer to make adjustments to his working life by either reducing his responsibilities or his working hours to try to accommodate his illness. Karl can still apply for ill-health benefits if this arrangement does not work. If he is then granted enhancement it will be calculated using his salary before the adjustments took effect.

  • Answer:

    Before age 55?

    Karl is already over age 55 when he joins the Teachers’ Pension Scheme. If he had been under 55 when he joined, he would have only been able to retire before age 55 if he was ill and could not teach anymore (see “What if I become ill”).

    Between ages 55 and 66

    When Karl has two years service he can choose to take Actuarially Adjusted Benefits, which will be reduced for the rest of his life to take account of the fact that they are being paid for longer.

    If Karl’s employer decides to grant him Premature Retirement he will receive unreduced benefits, but part will be paid by his employer. He must have two years service in the Scheme to receive this benefit.

    At, or after, age 66

    If Karl retires at age 66, then his pension will be paid to him without any reduction. If Karl continues to work past age 66 and then retires, his pension will be adjusted.

  • Answer:

    Karl can take phased retirement after he has two years pensionable service. That means he can still work and receive some of his benefits provided there is a reduction of at least 20% in his salary. Karl can do this three times before finally deciding to retire.

  • Answer:

    If after Karl retires in 2020 he decides to return to work his pension will not be affected and during his re-employment he will accrue further pension benefits.

  • Answer:

    If Karl dies in service a death grant will be paid which is three times his final salary at the date of his death. This will be paid to Karl’s spouse or partner unless he has nominated someone else to receive it.

    If Karl dies in service then his dependents will continue to receive his salary for three months. This is a short term pension, after that they will receive a long term pension.

    If Karl dies after he retires and it is within five years of his retirement, a death grant will be also payable. The death grant is the value of five years worth of pension less the value of the pension that has been paid. His spouse or partner will receive a short pension for three months based on his pension in payment.

    Karl’s long term pension is the value of 37.5% of his accrued pension. This will be enhanced but only if he is still in service and not if he has retired. The enhancement is calculated by using half of Karl’s prospective service multiplied by 1/57th of his annual rate of pensionable earnings when he dies.

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