Teachers - did you get your predicted pension

[BG2015]

I'm beginning to really think about retiring now after having breast cancer last year. I'm 54 and am now paying more towards my mortgage so I can retire at 56/57.

I regularly check my forecasted pension and lump sum on TPS but wonder how accurate it really is.

Can anyone say whether the (rubbish) calculators on there are any good.

I'm in the Final salary scheme and career average schemes so that complicates things further, plus theres the McCloud judgement to consider to. It's a minefield.

Not quite the same but I am in the local government pension scheme and I have found that the forecasts have been very accurate. I expect that the LGPS and the TPS may use similar or the same software for their forecast tools. I am also in the final salary and career average parts of the scheme so similar to you and the forecast is within a couple of % of what I am going to get (pension being given early and beginns next month).

That's good to hear, thanks for replying.

I've found the TPS people are good at replying to queries - seems better when sent in via their online portal, so they have time to consider and they reply with a detailed answer.

Do they actually tell you your predicted lump sum and pension though?

They won't tell you any different amount of lump sum etc than is stated in the online TPS pension statement. But they could help if you have other questions.

TPS are good and give accurate information. I was planning to take early retirement in 2028 when I am 58 but with I’m now planning to go in 2026 at 56…
Although I have a pension, a financial investment in property will enable me to do this! By that point I will have done 44 years in education including 29 as a Headteacher.

I retired in 2021 and used to calculator -it was more or less correct. I had calculated my days service without taking off the two days I had been on strike

Bear in mind the TPS site doesn’t show the implication of McCloud yet. It shows what you’d get if the final salary ended in 2015 and then you were in average salary scheme from then.

If you were teaching in 2012 and still in 2015, you will have the opportunity for all your service to April 2022 to be in the final salary scheme. For most people, that is better.

You can do the calculations. Work out your service to April 2022 and use the TPS benefit statement to show your best average salary - could be the last year of best 3 of 10 averaged and adjusted for inflation. Use that figure in this calculation.

Salary divided by 80, multiplied by years of service to April 2022.

This will tell you the final salary part of your pension with the McCloud remedy (assuming you qualify for it by working in 2012 and still being employed by April 2015).

If your NPA in the final salary is 60 then you’ll also get the lump sum. It will be 3x the yearly pension you worked out using the formally before.

So this shows you what you could have at 60. If your NPA is 65 as you started work later, there won’t be a lump sum and you won’t get the full pension until 65. In either case it is possible to take from 55 with an actuarily reduced yearly sum. It is reduced by around 4% for each year you take it early,

You can then work out your career average amount from April 2022. It is simply 1/57 of your earnings for each year after then. You won’t get it until state retirement age in full, but again a reduced amount can be taken early.

You might have known all this before. However, it could be useful to you or someone else reading this, who wants to work out the implications of McCloud.

For me, McCloud means I will be able to retire sooner, quite simply because I can get more pension at 60 than I could have otherwise.

I retired in 2019. My pension was almost exactly as they stated on the forecast, give or take a few £. They cannot give an exact figure until just before you receive it - I think I got my letter stating the amounts about 3 days before my first payment.

I've got a mixture of final salary and career average as I've been teaching since 1996. I know the calculators don't take that into account. I'm nearly 54 and want to retire at 56/57 if I can.

My statement says a lump sum of £30k and pension of £16k if I retire at 57. I'm not staying until I'm 60, Ive had enough now!

@WombatChocolate , that looks very helpful but I feel very dense reading it...! I am LGPS and about to get my pension early (I am late 50s) but unreduced from the employers side. I have been in LG since the 1980s and paying into the pension. Does the McCloud judgement really affect me (I assume positively)once it has been properly worked out by the government? I have assumed the figures I have been given are the figures I will get.

The public sector pensions have got a timeline to work to, to produce pension statements which will show the 2 options available for those who qualify for the McCloud ‘remedy’. As yet, the pension statements only show what the situation is with people having their final salary end and moving to career average in April 2015.

When they are able to show both, you will see what I’ve mentioned in my previous post and 2 scenarios that you will be able to choose from at the point of taking your pension

1. Taking the Final salary pension until 2015 followed by Career Average from 2015
2. Taking the Final Salary pension until 2022 followed by Carrer Average from 2022

For most people No2 will be better but because for some No1 is better, they will have to give the choice.

Key differences include

1. The Career Average sections accrues faster - at 1/57 per year compared to 1/80 per year for Final Salary, so the yearly pension by retirement could be bigger. BUT the age you can take the Career Average, without actuarial reduction is later at State pension age (67/8) instead of 60/65 so most people will have to work longer to be able to afford to retire.
2. Only the Final Salary element has an automatic lump sum attached to it. It’s 3x the final salary yearly pension. Therefore, if you take Final Salary to 2022 instead of 2015, that yearly part of pension is bigger and therefore the lump sum too.

The Pension Statement will eventually show both options. You can think about your scenario and decide what’s best. Things people might consider are; do they want to keep working to 67/8? Can they afford to retire at 60/65 regardless of which pension they have? Is a lump sum important to them? Is their finishing salary (worked out as final year or best 3 years averaged of last 10 years service salary) likely to be their highest salary?

You can wait for that statement or you can use the simple calculation I gave in my post above so you know now. For me, doing the calculation showed me that by taking the McCliud Remedy option I can certainly stop work at 60 (or earlier) as I will have enough to live on at 60, bearing in mind my DHs situation too. I if took the Career Average for 2015-22 although I’d get a higher yearly pension at 67/8, the amount I’d get at 60 wouldn’t be enough for me to stop then. Bearing in mind I will get a full state pension at 67/8 also influenced my decision.

No-one will have to choose which option they go for u til they take their pension. However, people need to know the options sooner so they can plan ahead. It impacts how they might save and prepare and how they might work in the coming years.

It is very empowering to do the calculation and know what the 2 option figures are. If you can work those out, along with getting your state pension forecast and knowing similar information for any spouse, you can really start to see what your future might look like.

Toast, the McCloud remedy applies to anyone who was working and contributing to the pension in 2012 when the decisions to change to Career Average were made and still working and contributing in 2015 (2014 I think for LGPS as I think they changed a year before)

If you look on the LGPS website there will be info about this and info that helps people clarify if it applies to them or not. It totally sounds like it will apply to you.

Wow @WombatChocolate
I'm not a teacher but I am a civil servant so I'm also affected by McCloud. There is more useful information in your post than in the many many Civil service pension Events I have attended on line to try and get my head around it. There seems to be no way to use the modeller to predict which to opt for (I've been in CS since '98 but a lot of it part time)
Thanks! I'm going to save your post.

Does anyone know what the effect of paying extra for actuarial reduction of npa 67 to 65 years plus increasing the accrual rate may have on the figures given for the service that is currently in final salary moves over to career average. I have paid a whole lot extra for benefits that I needn't have paid for now.

@ToastCosILoveIt the McCloud remedy is different in LGPS because the LGPS moved people to the CARE scheme in a different way to the other public sector schemes. The LGPS has a final salary underpin which checks if you would have been better off in the final salary scheme and if you would then it pays the difference. That underpin will be extended to qualifying members - so you don’t need to make a choice in the LGPS like those in other public sector schemes will (as Wombat explained above).

Hopefully this link takes you to FAQs about McCloud in the LGPS
www.lgpsmember.org/help-and-support/frequently-asked-questions/?faq-type=mccloud-court-case

Just posting here so I can follow the topic easily. I had a 2 hour advice session with an adviser from Wesleyan last week and am joining a webinar later and trying to get my head around the figures. I want to leave at 55- 3 more years- but would like to reduce my hours or points until then if it doesn’t much affect my pension.

Wantmorenow, the government were/are trying to work out how to deal with people who paid extra contributions so they could take their Career Average pension earlier without actuarial reduction, as you mention.

I don’t think it is fully answered yet, but they say no-one will be disadvantaged. It could be that you get the extra you paid refunded with some kind of interest or some other option. They have to work out a way which is fair to people like you and to the scheme.

Clearly, the McCloud judgement was a massive blow to government. It’s going to cost them millions or billions in Pension payments, plus all the structural stuff of calculating and offering 2 options to people. It seems most of the costs will be borne by the Pensions themselves unfortunately, but that’s another debate.

I wonder if anyone can help me? I’ve been trying to work out what I should do. I am 47 and I joined the LGPS in 2006 but I left this year to move to the NHS - do I move my LGPS into the NHS scheme? How would that impact my McCloud position? I have googled until my eyes hurt but can’t work it out.

Get a quotation from the NHS scheme of the benefits it will offer as a result of the transfer and compare it to what you will get from the LGPS. That will hopefully help you see if transferring is a good idea. You won’t lose your entitlement to benefit from McCloud but the details of how transfer cases will be dealt with is still awaited I’m afraid. Don’t wait for the McCloud resolution through because you only have a year after joining to transfer between public sector schemes on favourable terms and you don’t want to lose that opportunity.

@WombatChocolate and @ChessieFL , thank you so much, really helpful.

Thank you @ChessieFL that’s so helpful!

@WombatChocolate do you know if it is possible to opt to not take the lump sum and have bigger monthly pension instead?

No. The automatic lump sum is….automatic and can’t be converted into more monthly pension.

Those without an automatic lump sum/ those with, can convert some of their monthly pension into a lump sum at a cost of £12 lump sum for each £1 lost in monthly pension. However, generally this is seen as a very poor rate.

What you can do if you want more monthly income is use the lump sum to generate it….could be invested into pensions or ISAs and then drawn down monthly. Or you could buy an annuity which will pay out monthly for life.

There seems to be a lot of great advice on this thread!
I suspect I will sound stupid, but when I read my pension forecast and it mentions an annual amount AND a lump sum (throat is the final salary teachers pension scheme), do I receive both of these or do you only get the lump sump if the monthly amount is reduced or something?