Phased retirement
UCU branch meeting
19.2.2013
Types of retirement
1. Normal age retirement – NPA. Pensionable
employment counts up to 75yrs. Unable to pay into TPS
after age 75, even if working.
2. Phased retirement – work part time and access part of
your pension.
3. Actuarially adjusted benefits [AAB] – claim your
retirement benefits after 55yrs. Pension is spread over
longer period therefore, smaller pension and lump sum.
Approx 4% actuarially reduced per year.
4. Premature retirement – employer’s discretion.
5. Ill-health retirement – permanently unfit to teach
before NPA
Phased retirement
• A way to combine your pension with more flexible
working arrangements
• Can access up to 75% of pension from age 55yrs
without ceasing work completely
• Must reduce work by at least 20% for at least
12mths. Can then go back to FT if post is available
• Before age 60, pension is actuarially reduced
• After age 60, pension abatement applies
• This option can be accessed twice before final
retirement
• Must be agreed by employer
Pension abatement [reduction]
• Between 55yrs and 59yrs 11mths – taking phased
retirement means you are not subject to pension
abatement
• If you retire once you are 60+yrs and in TPS prior to
2007, pension abatement applies
• Pension abatement: cannot return to HE after
retirement and earn more with your pension plus
pay than you would have earned before retirement.
Can access tax free lump sum only
• If you work in areas other than HE after retiring, you
are able to access all your pension
Benefits of phased retirement
1. No break in service
2. You do not lose accrued rights to sick pay, redundancy notice
or redundancy pay
3. You continue to add further years of service into the scheme
4. You continue to be covered by death in service grant
5. Succession planning for employer
6. Employ newer staff on lower salary grade – cost efficiency
7. Employee continues as a member of TPS
8. Employer retains expertise of TPS member for several more
years
9. After being on phased retirement for minimum of 12mths,
you may apply for permanent retirement or return to your
previous post if the hours are available
Example to illustrate
• Member is 58 years old, salary is £40,000. Has 20 yrs service in TPS.
• On taking phased retirement, at least a 20% reduction in salary is required
so £40,000 x 80% = £32,000
• Can then take up to 75% of pension, so will take 15 years pension rather
than 20 years, and this pension will be actuarially reduced using a factor of
91.1% [since actuarial reduction is approx 4% per yr]
• So pension will be (£40,000/80 x 15) x 91.1% = £6,832 plus an automatic
tax free lump sum of £20,498
• The member works two further years at 0.8, but is still based upon
£40,000 salary
• Therefore when the member reaches the age of 60 and decides to take
age related retirement they will receive another pension of (£40,000/80 x
(5 + (2 x 0.8)) = £3,300 plus an automatic tax free lump sum of £9,900
• This is where the 5 relates to the number of years left in the scheme when
the phased retirement began, and the 2 x 0.8 being the extra service
added to the scheme
Applying for phased retirement
https://www.teacherspensions.co.uk/public/resources/~/m
edia/Files/Documents/Forms/TP_Mem_Form_Phased_App.
ashx
https://www.teacherspensions.co.uk/
Apply using the Flexible Working Policy:
http://www.yorksj.ac.uk/human-resources/hr/policies-andprocedures/a-z-resultspage.aspx?idx=4133&idxltr=F&menupage=7152
Note: you are responsible for checking your pension
contributions – no duty of care in pensions!