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.

Looking at my pension(due to take it next year) TPS have not used the three highest years when calculating it but have used years when my salary was lower. Has anyone else had this?

@ElizabethBennetismybestfriend That seems odd... are you looking at the "revalued" column?

Yes. The three years they have used are not the three years with the highest salary in the last 10 years of pensionable service according to their own records (my TPS statement).

It is often the case that once the previous years are revalued, some earlier years are actually the highest. Salaries haven’t risen by inflation, so when the earlier years are revalued by all the actual I flatiin rates added together, they are often higher than your current earnings. Do look at the revalued salaries on your statement.

Your statement should have highlighted the years used for Method A (last year of working) and also highlighted which years are being used as Method B.

Many people will find Method B gives them the best final salary calculation and that it’s from nearer the start of the last 10 years.

Hmmm, odd. It's the highest continuous period of 3 years, not three individual years, does that make a difference?

@WombatChocolate - I have tried to get my head round pensions and do understand it better now ( mainly due to your posts on various threads - thank you).
I am an NHS nurse - hoping to retire in 2 years and return.
My question is - which 3 years will they look at - the years prior to 2022 or if I retire in 2025 -will they look at that year?
I want to go part time but I am also due a pay increase in 2024 so want to get the most for my 1996 pension pot.
Thanks
( I will retire and return but can continue to put into my 2015 pension I believe).

In the teacher pension they look at the 3 best consecutive years in the last 10 worked. I do t know how the NHS pension does it but their website will certainly tell you.

Is it in the last ten years worked or the last ten years before the final salary pension stopped existing?

Thankyou - I looked a while ago and couldn't see it.
I looked tonight - it does go up to retirement in the NHS - therefore I will be full time for the next few years. Oh well.

If you are retiring before the normal scheme retirement age you will have an actuarial reduction, this can be quite a lot. If you go out on redundancy or ill health then the reduction is usually waived. You need a proper written quote taking into account any reduction fir going early. The modellers online don’t always have this

If you’re part time, the salary that is used is still the full time equivalent for calculating final salary. In final salary schemes you accrue less years, but at full time equivalent. And yes, for Method A the final salary used to calculate the part you’ll get up to 2015 (or 2022 if you utilise McCloud) will be based on the full time equivalent at whatever point you stop working….that could be years further on than 2015 or 2022. It’s called the Final Salary link.

In Career Average it is based on a percentage of your actual earnings - 1/57 in teacher pension.

I keep thinking I understand a little more - but there are so many layers!
I've spent about half of my career being part time, and have wondered if I should be trying to increase my days for my final few years when that comes (though I don't want to!) to have a bigger final salary. But from what you've just said maybe it doesn't work that way?
Thanks to all the posters giving good advice on here!

You can’t boost the amount of service in the Final Salary scheme now. Working full time won’t impact that and if you worked full time on the same rate of pay or band you get now, working full time won’t boost the final salary section, as it’s all based on full time equivalents and service until 2015 or 2022.

Where working more hours will help is in boosting your career average pension. Quite simply, you’ll earn more, so the 1/57 of yearly salary which is based on what you actually earn will be more. But remember that doesn’t pay out, without an actuarial reduction before your state retirement age.

If you worked full time and also got a promotion, this could boost the final salary pension too, as the final salary it willbe based on could be your new higher promoted wage.

(@WombatChocolate I am a slight exception to your advice above, which is... amusing? I am still buying back "Past Added Years" which count towards the Final Salary Scheme, so if I go part-time and/or retire, and don't top-up the PAY contributions, I'll get less in that portion! I am also worried that if my independent school leaves TPS, I'll lose those still-unpaid years, but that's another kettle of fish.)

PhotoDad, yes you are in a very small minority….independent school and also doing buy-back.

I think that if a school Withdraw from TPS when you have buy-back going, it’s the same as if you leave teaching mid way through. I seem to remember that you have to pay a lump sum to cover the future payments or you can receive a refund the extra payments.

I think the McCloud decision caused a number of unanswered questions about things like buy-back, additional pension and other ‘flexibilities’ and I’m not sure answers to them have all been provided yet…but they say no-one will lose out.

Thanks, @WombatChocolate, that's my understanding too. Finding the lump sum would be nigh-on impossible, but I'll cross that bridge when I come to it. I've bought back the bulk of those extra years already, but was planning on getting them all! We'll see if things are clarified when the McCloud remedies are finally implemented, and/or if the school leaves TPS. (Argh!)

I've spent about half of my career being part time, and have wondered if I should be trying to increase my days for my final few years when that comes (though I don't want to!) to have a bigger final salary.

You will have more money to save though. I'd just put aside the extra to provide a bit of a cushion to bridge the gap between retiring and when you're eligible for your state pension.

I had an online teams meeting with a Wesleyan advisor last night.

I've been teaching since I was 26 and I'm 54 now. Always taught full time and I've had a TLR for a couple of years but not for a while now.

I've just been a bog standard classroom teacher, teaching outside of London. I've been UPS for about 17 years, so top of the pay scale.

I'm in both schemes and the Mccloud judgement has been included in the calculations

I thought I'd share with you what my pension and lump sums would be.

Retire at 57
£14 342 pension
£39, 763 lump

Opt for max lump sum
£11,297
£75,311

Retire at 58
£15,499
£40,435

Opt for max lump sum
£12,130
£80,866

Retire at 60
£18,099
£44, 047

Opt for max lump sum
£13,995
£93, 298

Certainly got me thinking. I always thought I'd go for more pension and less lump sum but that £80k looks nice especially if I get a part time job and downsize too!

Once I get to 67 I get another £10k state pension.

The lump sum is very poor value. You lose £1 of yearly pension for each £12 gained in lump sum. If you live more than £12 years after taking the pension, you’re worse off. Not only that, having a monthly pension means the payments are index linked.

A lump sum can be good if you have a really specific use for all of it….paying off a mortgage etc. However if you end up ‘sitting’ on any if it, it is eroded by inflation and most people will have been better having a larger pension. It won’t only be a smaller pension whilst you have a part time job, but once you’ve stopped working altogether and don’t have that salary income.

Apparantly, when people have the choice, vast numbers do go for the bigger lump sum. It’s the thing about quicker gratification vs delayed gratification and especially if they have never had access to such a sum of money before.

Everyone is different though and one size doesn’t fit all, so there’s no ‘right’ thing to do. I guess you should factor in the state pension you will get at state retirement age…perhaos you won’t need such a large yearly teacher pension if you’ll have the full £10k ish.

My OH and I have been talking about it and we tend to agree that the larger pension and smaller lump sum is probably the better option. I also think the Weslyan push you take the higher lump sum so that you invest it with them and they get a nice commission.

I'm quite risk averse so it would end up,in a bank account earning very little. I like knowing how much I'm going to be getting each month and worrying that my 'investments' weren't doing well to top up my pension would be a worry.

My retirement is still a while off yet, a lot can happen.

Thank you for sharing, @BG2015! I am in much the same position as you. I also think that the extra lump sum is poor value. I have done lots of calculations myself and will probably speak to an advisor at some point, but it's comforting to know that I can probably retire at around 57 or so. If my school remains in the TPS until then... but that's another story. Good luck with decision makinng!

@WombatChocolate Thank you SO much for the valuable information you've shared here.
May I just ask, you mentioned earlier (if I understood you correctly) that it tells you on the TPS website which are the best 3 years of your last 10. I can't find that specifically but am wondering if it's automatically factored in to the final salary prediction? I mean, let's face it, everyone would opt for those best three if given the chance.

I am going for smaller lump sum and larger pension.

No one knows what will happen truly with inflation. Pension uplift was 10.1% this April based upon last September’s inflation rate.

Diddy Dave - Golden Goose video explained it well. IMHO

Yes I saw that video too.

Can I ask if anyone can advise me? I transferred a final salary pension over from West Midlands pension scheme to be added to an LGPS scheme around 2012. I realise that my old pension had NPA of 60 and my new one is different. I stupidly didn't take advice on whether to consolidate the 2 pensions. Would anyone be able to tell me if I can do anything to change that now?