Pensions: All Change by @TeacherToolkit

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Teachers Pensions Savings Money Pink Piggy Bank


Ross Morrison McGill founded @TeacherToolkit in 2010, and today, he is one of the 'most followed educators'on social media in the world. In 2015, he was nominated as one of the '500 Most Influential People in Britain' by The Sunday Times as a result of...
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About a month ago, I received my annual statement from (TP) Teacher’s Pensions. You may or may not be up to speed with the recent changes to teacher pensions, so this blog is designed to help you the reader, and perhaps something that could be shared with colleagues in your school during a short pensions workshop.

Image: The Telegraph

Teachers Pensions Savings Money Pink Piggy BankIt was about 6 years ago, when I worked in a far-from-organised senior leadership team, that I was first made aware as to how important it was to keep a close eye on employer pension contributions and key financial data stored and shared by your own school. Almost 3 years later and after leaving ‘that school’, what later transpired was that the finance team had not been submitting the correct financial data to the Teachers’ Pensions. These are the people responsible for administering teachers’ pensions on behalf of the government. Their job is to help teachers with their pensions and also to support the employers of teachers throughout England and Wales.

Of course, when I first read my statement, on closer inspection I was furious to discover that I had several years of service missing from my ‘reckonable service!’ Having managed to organise a website login to Teacher’s Pensions and then speak to somebody at their office, I soon realised that the responsibility lay with my employers and not with TP.

I was even more disappointed with my school! With this in mind, make sure your information is correct and that you school is submitting (the correct) data annually to the Teachers’ Pension Scheme. The changes are complicated and to help avoid any confusion, this blog is to help clarify those changes (for myself and) the reader. Here is my summary in 10 simple points.

All Change:

The pension scheme has changed since 1 April 2015.

Teachers Pensions Savings Money Pink Piggy Bank

Image: SPS

  1. Firstly, if your teacher (prior to the above date), you will automatically become a member of the new career average arrangements as a transitional member from 1 April 2015! You can opt out of this new arrangement if you wish to, and you may want to consider speaking with an (IFA) Independent Financial Advisor.
  2. This means you will remain entitled to the benefits already built up in any existing arrangement.
  3. So, if you made the transition into the career average arrangements, you will still be entitled to have your benefits in the final salary arrangements calculated with reference to your final salary at retirement.
  4. You will retain this final salary provided you do not have a subsequent break in service was which exceeds five years.
  5. Under the new arrangements, for every year you are a member of the scheme, you will build up an ‘accrue’ pension.
  6. In the new arrangement, for each year you were teaching, you will build up 1/57th of your pensionable salary. This is known as ‘reckonable service’ and is used to calculate your average salary.
  7. So, if you earn £28,500 p.a. you’ll build up a pension of £500 p.a. for that year.
  8. The calculations are based on you Average Salary which must be higher of: a) the pensionable salary you received in the last 365 days of pensionable service; or b) average of the best three years of consecutive salaries during the 10 years prior to leaving service. Either way, when you retire you can withdraw a regular monthly income.
  9. Contributions are still set based on your earnings and are between 7.4% on the 11.7%. You can pay more into your pension if you wish to.  There are currently three different options payments know as ‘flexibilities.’
  10. Normal pension age and the new scheme is linked to your state pension age (or 65, whichever is higher). Normal pension age is simply the age at which you can take your benefits without a reduction. You can still retire earlier than this but your benefits will be reduced to reflect the fact that they’re being paid for longer. You can also choose to retire after your normal pension age.

Share this with colleagues. To find out more, there is a useful FAQs page here and some very helpful factsheets here.

There is also a useful 1-minute video below:

Teacher Pensions Vimeo Video

Example Accrual:

Mrs. Dianne Example is a teacher who has earnings between 1 April 2015 and 31 March 2016 at £30,000. In the first year Mrs. Example is in career average and if she does nothing, she will earn a pension for that year of: £30,000 x 1/57 = £526.31. To build up a higher pension Mrs. Example could elect to pay for faster accrual and select from the range of accrual rates available.There is a table below that shows the amount of pension Dianne would build up in a single year if she selected to pay additional contributions to earn a faster accrual rate, compared to the standard rate of 1/57th. Find out how this is calculated here.

Teachers Pensions Savings Money Pink Piggy Bank

Image: Evilflea

2 thoughts on “Pensions: All Change by @TeacherToolkit

  1. Teachers Pensions have posted a note about retirement planning courses, which retiring teachers may find useful:

    Training & Teachers Retirement Agency

    We’ve received queries regarding seminars for teachers approaching retirement, which are being offered by ‘Teachers’ Planning Retirement’, the ‘Teachers Retirement Agency’ as well as other providers.

    Teachers’ Pensions don’t provide advice services and these seminars are not being delivered by Teachers’ Pensions, nor do we appoint companies to deliver the seminars on our behalf.

    If you receive any queries from members, please advise them that these are not Teachers’ Pensions events and that we do not charge for any seminars that we deliver.

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