Adviser > Technical Central > Pre simplification > Occupational > Teachers' pensions
Teachers' pensions
The content of this page is based on our understanding of how pensions worked before A-Day, the 6 April 2006, and is provided for reference only.
The guide incorporates the following schemes:
Scottish Teachers’ Superannuation Scheme (STSS)
The Teachers’ Pension Scheme (TPS)
Teachers’ Superannuation Scheme Northern Ireland (TSSI)
The Government plan to introduce changes to all of the Teachers' schemes one of which is to make the normal retirement age 65 for all new entrants. Initial discussions will take place prior to March 2006, the consultation period will close in June 2006 and any changes will be made as soon as practical after June 2006. The current information for the schemes is provided below:
Administrator
| STSS | TPS | TSSI |
Websites
Scottish Teachers' Pension Scheme - Scottish Teachers Pensions Website
English & Welsh Teachers' Pension Scheme - English and Welsh Teachers Pensions Website
Northern Ireland Teachers' Pension Scheme - Northern Ireland Teachers Pensions Website
Contracted-out
Yes
Eligibility
All part-time and full-time teachers between the age of 18 and 70
Contribution basis
AVC scheme available - Yes
Stakeholder scheme available - There is no designated scheme, however members are free to have a stakeholder plan (subject to normal restrictions)
Member contribution - 6% of pensionable salary
Employer contribution
STSS – 12.5% of pensionable salary
TPS - 13.5% of pensionable salary
TSSI – 7% of pensionable salary
Added Years permitted? - Yes, the scheme may accept a transfer payment from a previous pension scheme
Salary definition
Pensionable salary - The highest amount of full salary for any 365 consecutive days during the last 3 years of reckonable service
Pensionable service - Date of joining scheme to date of exit/retirement/death
Normal retirement benefits
Retirement Age - 60
Pension accrual - 1/80th of pensionable salary for each year of reckonable service
Retirement lump sum - 3/80ths of pensionable salary for each year of reckonable service
Early retirement on the grounds of ill-health
Available if the member is under age 60 and has to retire because of permanent ill-health
Immediate benefits are calculated as for normal retirement. An enhancement is usually granted on ill-health based on service to date. This enhancement differs for each scheme, please refer to the scheme booklet
Early retirement
Members are entitled to early retirement from age 50 only if made redundant or on efficiency grounds if the employer agrees to meet the additional cost. Benefits are calculated as for normal retirement
Members can take early retirement from age 55, however the pension and cash will be reduced by an actuarial factor provided by the Government Actuary
Late retirement
Members can continue membership if still in service until age 70 (subject to Inland Revenue maxima)
Family benefits
These benefits are payable on death of the member and depend on ‘family benefits service’ accrued
To qualify for these benefits members must have more than 2 years service
Widow’s and children’s benefits accrue from 1 April 1972
Widower’s benefits accrue after 5 April 1988, plus any service before this date for which dependant’s benefit cover has been purchased
Death before retirement benefits
Lump sum - 2 times pensionable salary less any benefits previously paid to the member
Dependants' benefits - A short-term pension is payable for 3 months which is equal to the member’s pensionable salary at date of death. Additional short-term pensions are payable if the member has a child/children
A long-term pension amounting to 1/160th of pensionable salary for each year of reckonable service is payable after the short-term pension
Pensions are also payable to eligible children
Deferred members
If death within 1 year of leaving due to ill-health, and not in receipt of a pension, a lump sum of 2 times pensionable salary
Lump sum - The greater of:
- the lump sum which would have been paid had the member retired at date of death
- contributions plus compound interest less any benefits already paid
Dependants' benefits - Normally 50% of deferred benefit
Death after retirement benefits
Lump sum - If member dies within 5 years of starting to receive their pension, a lump sum representing the balance of 5 years pension will be payable as a lump sum
Dependants' benefits - A short-term pension equal to the rate of the member’s pension will be payable for 3 months to the widow(er)
A long-term pension will then be payable which is usually 50% of the member’s pension at date of death
Pensions are also payable to eligible children
Pension increases
In line with RPI, however not payable until age 55 (exceptions: ill-health retirement and dependants' benefits)
Early leavers options
Transfer value - If member has more than 2 years reckonable service, then a transfer value is available
Preserved pension - If member has more than 2 years service a paid up pension will be granted and is payable from age 60
Refund of contributions - If the member has less than 2 years service, then a refund of member’s contributions can be paid
Treatment of pension rights on divorce
Pension sharing on divorce - The accrued pension rights are reduced by a percentage confirmed by the court. The former spouse is given rights in the scheme equal in value to the amount of reduction – known as the pension credit rights. There is no option to transfer pension credit rights out of the scheme
Earmarking - The court can order the scheme to pay all or part of the pension and lump sum at retirement to the former spouse. The scheme will only make payments to the former spouse when a court order has specifically instructed them to do so. If the former spouse remarries, he or she will not receive payments in respect of the pension after date of remarriage, however this normally does not affect the lump sum
Offsetting - The pension rights are valued along with any other matrimonial assets to enable a financial settlement to be made
Any research and analysis included has been provided by us for our own purposes and the results of it are being made available only incidentally.
Published 12 November 2004
Updated 28 October 2005
For professional advisers only
