 |
|
Your Pension Benefits
Qualifying for benefits
Calculation of benefits
Pensionable Salary
Age Retirement
Actuarially Reduced Pension
Premature Retirement
Phased Retirement
How do I apply for benefits?
Can I receive my benefits if I become ill?
How do I apply for ill health retirement?
Pensions Increase
Possible reductions in your Pension
Winding down
Pensions in Payment - find out more about P60's and annual pension increase
Qualifying for benefits
This means becoming entitled to a pension when you retire. You will qualify for benefits if you complete:
- two years’ pensionable employment at any time after 5 April 1988;
- two years’ pensionable employment at any time, if you were in pensionable employment on 6 April 1988; or
- five years’ pensionable employment at any time.
If you are in part-time pensionable employment, the whole period counts towards the above qualifying periods. But only the days you actually work will count towards your benefits. So if you work half-time for a year, this counts as one year for qualification, but only six months for calculating your benefits.
Calculation of benefits
If you were a member of the scheme before 1 April 2007 the method of calculating benefits, which will consist of an annual pension and a lump sum based on reckonable service and pensionable salary, is as follows:
Pension = Service x Pensionable Salary
80
The lump sum is three times the pension.
If you became a member of the scheme on or after 1 April 2007 your benefits will consist of an annual pension based on reckonable service and pensionable salary. It will be:
Pension = Service x Pensionable Salary
60
If you were a member of the scheme before 1 April 2007 you can convert, ‘commute’, part of your pension to receive a lump sum up to 25% of your fund value. The formula for calculating the maximum amount of lump sum benefits that can be paid is as follows:
[Pension x 20] + [Lump sum x 20/12]
4.6667
If you joined the scheme on or after 1 April 2007, the formula for calculating the maximum amount of lump sum benefits that can be paid is as follows:
Pension x 20
4.6667
The resulting figure represents 25% of the fund value and is the maximum lump sum you may take. A member can choose the amount of lump sum they are paid up to the 25% maximum. In doing so there is a consequent reduction in the value of the annual pension. For each £1 of pension commuted there will be £12 of lump sum paid.
A Pensions Modeller is available on the Calculator section of this site, should you wish to investigate further how commutation of Pension would affect your retirement benefits.
Pensionable salary
If you left service before 1 April 2007 your pensionable salary is:
- The highest amount of full salary for any consecutive 365 days of reckonable service, whether continuous or not, during the last three years of reckonable service.
- Reckonable service is those years and days that count towards your pension benefits.
If you were in service before 1 April 2007 but retire before 31 March 2009 your pensionable salary is the best of the following :
- The highest amount of full salary for any consecutive 365 days of reckonable service, whether continuous or not, during the last three years of reckonable service.
- The salaries for the last ten calendar years are increased using the Retail Prices Index (RPI). The average of the best consecutive three years’ re-valued salaries in those ten calendar years is used.
- The pensionable salary received in the last 12 months before the date of retirement.
If you retire after 31 March 2009 your pensionable salary is the better of the following:
- The salaries for the last ten calendar years are increased to current day value using the RPI. The average of the best consecutive three years re-valued salaries in those ten calendar years is used.
- The pensionable salary received in the last 12 months before the date of retirement.
The salary used to calculate your retirement benefits may be restricted if your salary is increased by more than 10% plus the standard increase during any financial year in your last 3 years of pensionable employment before retirement and your last year’s salary is used as the pensionable salary and your employer is not prepared to meet the cost of the difference in benefits. If your employer pays the additional contributions, you will receive benefits calculated on the unrestricted salary.
It is not possible to anticipate whether this provision might apply in any individual's case (and, if so, what the impact might be) in advance of retirement. It is only at retirement that we will be in a position to determine your pensionable salary period and assess your salary progression against standard pay awards during that period. If you are approaching retirement and you think that it is possible that your pensionable salary might be affected you should speak to your employer.
Age retirement (Retiring at NPA or later)
You will be paid age retirement benefits on application at NPA if you are no longer in pensionable employment. If you remain in employment after NPA, you will be paid benefits when you eventually cease pensionable employment. If you have a break in pensionable employment after NPA, even for 1 day, you will be entitled to benefits from that date. All reckonable service up to age 75, limited to 45 years in total, will be used in the calculation of your retirement benefits.
Actuarially Reduced Benefits (Retiring between the ages of 55 and NPA)
If you are aged between 55 and NPA and you have been in pensionable employment on or after 01 July 2002, you will be able to obtain early access to your pension benefits, which will be actuarially reduced, provided that your benefits are at least equal to your GMP.
If you are in pensionable employment or excluded employment when you apply for actuarially reduced benefits you must obtain the consent of your employer to gain immediate access to retirement benefits. Employers cannot withhold their consent for longer than 6 months from the date on which you submit your request. Subject to your employer's consent, actuarially reduced pension benefits are paid from the day after the last day of pensionable or excluded employment.
If you have already left teaching when you apply, benefits will be paid from a date not earlier than 6 weeks after the date of your application.
Shown below are the Factors used in the calculation of an ARP pension and Lump sum. These are new factors which came into force with effect from 1 October 2007. The new factors provide a single (age-related) reduction factors which are applied to both the pension and lump sum.
The following factors are applicable to those members who's NPA is 60.
AGE |
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 |
Complete years |
||||||||||||
| 50 | 0.617 | 0.619 | 0.621 | 0.624 | 0.626 | 0.628 | 0.630 | 0.632 | 0.634 | 0.637 | 0.639 | 0.641 |
| 51 | 0.643 | 0.645 | 0.648 | 0.650 | 0.653 | 0.655 | 0.658 | 0.660 | 0.662 | 0.665 | 0.667 | 0.670 |
| 52 | 0.672 | 0.675 | 0.677 | 0.680 | 0.682 | 0.685 | 0.688 | 0.690 | 0.693 | 0.695 | 0.698 | 0.700 |
| 53 | 0.703 | 0.706 | 0.709 | 0.712 | 0.714 | 0.717 | 0.720 | 0.723 | 0.726 | 0.729 | 0.731 | 0.734 |
| 54 | 0.737 | 0.740 | 0.743 | 0.746 | 0.749 | 0.752 | 0.755 | 0.758 | 0.761 | 0.764 | 0.767 | 0.770 |
| 55 | 0.773 | 0.776 | 0.780 | 0.783 | 0.786 | 0.790 | 0.793 | 0.796 | 0.800 | 0.803 | 0.806 | 0.810 |
| 56 | 0.813 | 0.817 | 0.820 | 0.824 | 0.827 | 0.831 | 0.834 | 0.838 | 0.841 | 0.845 | 0.848 | 0.852 |
| 57 | 0.855 | 0.859 | 0.863 | 0.866 | 0.870 | 0.874 | 0.878 | 0.881 | 0.885 | 0.889 | 0.893 | 0.896 |
| 58 | 0.900 | 0.904 | 0.908 | 0.912 | 0.916 | 0.920 | 0.924 | 0.928 | 0.932 | 0.936 | 0.940 | 0.944 |
| 59 | 0.948 | 0.952 | 0.957 | 0.961 | 0.965 | 0.970 | 0.974 | 0.978 | 0.983 | 0.987 | 0.991 | 0.996 |
The following factors are applicable to those new members who joined the scheme after 1 April 2007 and who's NPA is 65.
AGE |
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 |
Complete years |
||||||||||||
| 55 | 0.582 | 0.585 | 0.587 | 0.590 | 0.592 | 0.595 | 0.597 | 0.600 | 0.602 | 0.605 | 0.607 | 0.610 |
| 56 | 0.612 | 0.615 | 0.617 | 0.620 | 0.623 | 0.625 | 0.628 | 0.631 | 0.633 | 0.636 | 0.639 | 0.641 |
| 57 | 0.644 | 0.647 | 0.650 | 0.653 | 0.655 | 0.658 | 0.661 | 0.664 | 0.667 | 0.670 | 0.672 | 0.675 |
| 58 | 0.678 | 0.681 | 0.684 | 0.687 | 0.690 | 0.693 | 0.696 | 0.699 | 0.702 | 0.705 | 0.708 | 0.711 |
| 59 | 0.714 | 0.717 | 0.721 | 0.724 | 0.727 | 0.730 | 0.734 | 0.737 | 0.740 | 0.743 | 0.747 | 0.750 |
| 60 | 0.753 | 0.757 | 0.760 | 0.764 | 0.767 | 0.771 | 0.774 | 0.778 | 0.781 | 0.785 | 0.788 | 0.792 |
| 61 | 0.795 | 0.799 | 0.803 | 0.807 | 0.810 | 0.814 | 0.818 | 0.822 | 0.826 | 0.830 | 0.833 | 0.837 |
| 62 | 0.841 | 0.845 | 0.849 | 0.853 | 0.857 | 0.861 | 0.866 | 0.870 | 0.874 | 0.878 | 0.882 | 0.886 |
| 63 | 0.890 | 0.894 | 0.899 | 0.903 | 0.908 | 0.912 | 0.917 | 0.921 | 0.925 | 0.930 | 0.934 | 0.939 |
| 64 | 0.943 | 0.948 | 0.953 | 0.957 | 0.962 | 0.967 | 0.972 | 0.976 | 0.981 | 0.986 | 0.991 | 0.995 |
Premature Retirement (Caused by redundancy or reorganisation)
If you are aged 50 or over (aged 55 if you entered the scheme after 30 June 2006) and your employer makes you redundant or you leave pensionable employment on the grounds of organisational efficiency, you may be granted premature retirement benefits. The payment of these unreduced benefits from the STSS is at the discretion of your employer. The premature retirement arrangements provide for two types of compensation payable by your employer:
- mandatory compensation - benefits (pension and lump sum) are split between the scheme and your employer. Your employer must agree to pay this if an application for premature retirement benefits is to be accepted;
- discretionary compensation - your benefits may be increased by your employer to compensate that you have had to retire early. Whether to increase your benefits in this way is entirely at the discretion of your employer and is subject to certain limits.
Phased Retirement (Drawing part of your benefits while continuing in service)
After age 55 you may take phased retirement without having a break in employment provided that your pensionable salary reduces by 25% or more for at least 12 months. This could for example be because you have taken up a post of lesser responsibility or because you are working reduced hours. You will need to discuss this arrangement with your employer and they will be required to provide confirmation of the reduction on your application form. You may exercise this option twice before final retirement.
You can decide how much you wish to take of the benefits you have accrued up to the commencement of phased retirement up to a maximum of 75% of your total benefits. Remaining service, which must be at least 25%, will be aggregated with any subsequent service you accrue and be used in any future benefit calculations.
These benefits will be actuarially reduced by a factor based on your age at the phased retirement date.
How do I apply for retirement benefits?
You should apply to SPPA about four months before the date of your retirement or when your benefits are due. You can obtain an application form from your employer if you are in service otherwise it can be obtained from the Forms and Leaflets section of the STSS Website or by contacting the Agency.
Can I receive my benefits if I become ill?
If you are under NPA and have to retire through ill-health, you can apply for ill-health benefits. Applications should only be submitted after all other avenues such as redeployment have been exhausted. You must provide medical evidence that your illness permanently prevents you from teaching. Ill health benefits can be paid at two different levels depending upon the severity of the illness; Partial Incapacity Benefits (PIB) and Total Incapacity Benefits (TIB).
PIB would be granted if you are assessed as being permanently unable to teach but can undertake other employment. Members who qualify for PIB will receive a lower level of benefits consisting of service accrued to date of retirement with no enhancement.
TIB would be granted if, as well as being permanently unable to teach, you are assessed as having your ability to carry out any work impaired by more than 90% and likely permanently to be so. The total amount of enhancement you may receive if you are awarded TIB is half the service you could have completed before normal pension age (NPA).
If you are not in pensionable employment and you are not on sick leave or parental leave, only PIB can be granted if you apply for IHR. Your service will not be enhanced but you must meet the criteria for TIB.
Ill-health benefits cannot be awarded to a teacher who has been barred for misconduct or who is under investigation with a view to barring. Where a teacher under investigation is not subsequently barred, and an application for ill-health benefits is accepted, the benefits will be backdated.
You cannot normally obtain ill-health benefits if you have already been awarded premature retirement benefits. If you are seriously ill, your ill-health pension may be commuted to a lump sum payment. The request for commutation must be made at the time of application for ill-health benefits: a pension cannot be commuted once it has come into payment. Life expectancy must be less than a year. The lump sum payment amounts to approximately five times the annual pension.
If you have not been in service long enough to qualify for ill-health benefits you can apply for a short-service incapacity grant. You must have at least one year of pensionable employment to your credit. You must apply within 12 months of leaving reckonable service. The incapacity grant is 1/12 of your final pensionable salary for the length of your reckonable service (years and days).
How to apply for ill-health retirement (IHR) benefits
If you are still employed you should obtain the two forms required for your application from your employer. One form is for you to complete with your employer, the other is for the medical evidence to support your application.
If you are no longer employed as a teacher you can either download the forms from the Forms and Leaflets section on the website or contact the SPPA directly, quoting your teacher’s reference number or National Insurance number.
Forms should be returned to SPPA together by your employer if you are in service or by you if you are out of service. Employers and their occupational health advisors must look at ways of helping you return to work, e.g. re-deployment, part time working, transfer to a post with less responsibility or consider other workplace adjustments, before concluding that IHR may be appropriate. You and your employer’s occupational health advisor in conjunction with your medical practitioner need to provide the medical evidence and complete the application forms. The cost of providing medical evidence is a matter between you and your employer.
If you left pensionable teaching within 12 months of submitting your application, the medical information sections of your application form must be completed by your ex-employer. If you are not currently employed in pensionable teaching employment you will have to pay for any costs incurred in providing medical evidence.
Pensions Increase
Your pension will be increased to take into account increases in the cost of living. This is called ‘index-linking’ because the increases are related to rises in the Retail Price Index. The increases are paid in April, the same date as increases in state social security benefits.
Preserved pensions and lump sums are also increased so that they keep their value. Pensions Increase also applies to pensions paid by the scheme to widows, widowers, civil partners, children and dependants.
If you take premature retirement, Pensions Increase will not usually begin until you are aged 55.
Possible Reductions in your Pension
National Insurance Modification
If you are a member with service before 1 April 1980, your STSS pension will normally be slightly reduced (“modified”) when you reach State retirement age.
This reduction will be at the rate of £1.70 per year for each year of service before 1 April 1980, subject to a maximum reduction of £67.75.
This is to take account of the National Insurance flat-rate retirement pension you will receive at State pension age.
In addition, if you are a member who participated in the graduated pension scheme – which was the forerunner to SERPS – at any time between 3 April 1961 and 5 April 1975, you will have your pension further reduced from State scheme retirement age to take account of your graduated pension.
The maximum reduction for this is £3.90 for each year of participating service.
The graduated pension scheme was wound up on 6 April 1975, so it does not affect members who have joined the scheme since then.
If you did not participate in the graduated pension scheme, your pension is subject only to the reduction for flat-rate retirement.
Winding Down Employment
The Winding Down Scheme is a phased retirement option which, if you are approaching retirement age, offers you the opportunity to continue in employment on a part-time basis whilst protecting your overall final retirement pension entitlement.
You cannot elect to enter winding down employment earlier than four years prior to Normal Pension Age and have a minimum of 25 years teaching service (ie you must have had a contract to teach for at least 25 years) of which the last 10 years must have been full-time service. A credit of up to 5 years for a break or breaks in service will count as qualifying service.
The scheme incorporates the following features:
- your part-time contract must be set at a minimum of 0.5 full-time equivalent, but could be for more;
- each year you serve under the part-time contract will count as one full year for pension benefit calculation purposes;
- your final pensionable salary, for benefit calculation purposes, will be the salary that you received in the 365 days prior to entering winding down employment re-valued, using the Retail Price Index, to the actual point of retirement;
- your contributions and your employers’ contributions will be based on actual salary;
- it is possible under the scheme for contracts to end after your Normal Retirement Date subject to a maximum length of 4 years.
The Winding Down Scheme is available to all members who meet the eligibility criteria, provided that their employer has determined that they wish to offer special part-time contracts which fit within the scheme.
Further information is contained in the Winding Down Leaflet available from us. Applications should be made on form – STSS: (WD)12