TPS changes 2015

Teachers Pensions Scheme 2015 onwards

On 1 April 2015 the scheme changed for many members, one of the significant changes for part-time lecturer is that the pension contributions are now based on the members' actual earnings and not their full-time equivalent salary (FTE). The new contributions are

What happened to members?

From the 1 April 2015 there are four categories of active members.

• Protected members are thosewho were within 10 years of their normal pension age on 1^st April 2012.  They have remained in service will continue in their old pension scheme unless they have a break in service of longer than 5 years.
• Tapered members are those who were within a further three years on 1 April 2012 (that is between 13 to 10 years from their pension age). These members will remain with their old pension scheme until a date in the future. To check when you move into the new scheme go to Teachers' Pensions website. When you move over you will have 6 months to opt to 'Buy out Flexibility' , that is actuarial reduction which would be applied between the ages of 65 and 68 years. This is 3% per year for this extra time not the 5% plus in line with the agreement struck with the government.
• Transitional members are all the rest who moved over into CARE on 1 April 2015.
• New members are those who joined after this date or who return to lecturing after a break longer than 5 years.

What happens to your final salary pension?

Your final salary pension is protected but it continues to be linked to your future salary for the pension calculations when you draw your pension.

How does the new pension work?

Members are now in a career  averaged revalued earning pension scheme (CARE) this means that whatever they earn in the financial year will be divided by 1/57^th and put into the pension account and this figure will increase by CPI plus 1.6% annually. There is no automatic lump sum in this pension scheme. All years will be totalled at the point of leaving the scheme. The normal pension age is also now tied to their state pension age.

All earnings should count for pension purposes unless the individual has opted out.  Members have the right to opt out of all of their contracts or simply one or more of them. Think carefully before considering opting out. You need a pension to live on when you are not able to work. Whilst you are in service if you are in the pension scheme should you die then your family or estate will receive three times your full-time equivalent salary irrespective of how small your part-time earnings are. There is also a short term and long term pension paid to spouse, civil partners, same sex spouses and children or nominated partners.

You can improve your pension

The option you have is to purchase 'Additional Pension Benefits' either by lump sum or monthly instalments. For every £250 you purchase will sit on top of your pension. You can pay more and on your death have half of this passed on to your spouse, civil partners, same sex spouse and nominated partners but it will cost you more to purchase.

To purchase 'Faster Accrual', this is where you are able to opt to pay for 1/55^th, 1/50^th or 1/47^th rate for one financial year at a cost and this is then revalued in the same way. Details of the cost of this are available on the Teachers Pensions website.

Money purchase AVCs with Prudential

You are able to pay into a Prudential fund that you select and your money will be invested on the stock market and you are able to build up more pension savings. With the new pensions flexibilities members can:

• use this fund to purchase an annuity
• or at retirement draw out all the fund (25% will be tax free and the rest taxed at your marginal rate of tax)
• or you can move the fund to a draw-down arrangement and draw some out when you wish to with the 25% of the drawdown tax free
• or use the fund for partial encashment. This might be a useful safeguard if you were made redundant close to your normal pension age.

Your retirement

Age retirement

If you are in employment you can draw all your pension unreduced when you reach your state pension age.

If you are no longer working as a lecturer in an institution covered by the Teachers' Pensions Scheme you are able to draw your pre 2007 pension (at age 60 years) or your post 2077 pension (at 65 years), and leave your CARE pension until state pension age, or draw it early and have this part reduced.

Actuarially reduced pension

You are able to draw your pension from age 55 years but it will be actuarially reduced to reflect this.

Ill-health retirement

From April 2015 you are able to receive your pension due to ill-health up to 2 years after leaving the institution as long you left due to illness and it is the same illness that is causing you to draw the pension.