1. Briefing – Pension Changes Short Guide April 2015
February 2015

2. Overview TPS pre and post 2007 Final salary
Contribution rate = 6.4% (pre April 2012)
Normal Pension Age (NPA) = 60 (pre 2007 members) 65 (post 2007 members)
Accrual rate = 1/80 (pre 2007 members) 1/60 (post 2007 members)
TPS 2015
Career average (CA)
Contribution rate = average 9.6%
Normal Pension Age (NPA) = Equal to State Pension age (65 to 68 depending on age)
Accrual rate = 1/57
Revaluation rate = CPI + 1.6%
Special early retirement reduction factors

3. Pay More
Average employee contribution rate = 9.6 per cent (up from 6.4 per cent pre-April 2012)
Contributions based on actual salary, not FTE salary
Salary Band
Contribution Rate
£0 - £25,999
7.4%
£26,000 - £34,999
8.6%
£35,000 - £41,499
9.6%
£41,500 - £54,999
10.2%
£55,000 - £74,999
11.3%
£75,000+
11.7%

4. Work Longer
Scheme normal pension age to be linked to state pension age
Based on age as at April 2012
Work till 68 for a full pension if aged 34 or under
Work till 67 if aged 35 to 50
Work till 66 if aged 51 to 58
Transitional protection if within 10 years of current scheme pension age (see later)
Pension age may be even higher in future = 70+ for youngest teachers

5. Get Less Career average means less for vast majority of teachers
Accrual rate of 1/57 of average salary per year but
Lower ‘revaluation rate’ means pension will lose ground against average earnings before retirement
Reduced actuarial reduction factors of 3 per cent for those with NPA above 65 (for gap between 65 and NPA)
CPI inflation link during retirement takes over £30,000 from teachers with £10,000 pension

6. Pension Build Up Each year members ‘bank’ 1/57 of pensionable earnings
The amount banked is increased each year until retirement. At retirement all separate years add together to form total pension
In-service members have their pension rights revalued each April with CPI inflation per cent
Out of service teachers have their pension rights revalued annually by CPI only
If member leaves service and returns within five years then treated as in-service for whole period
Overtime included in definition of pensionable earnings

7. When will I be switched to career average?
Teachers within 10 years of NPA on 1 April 2012 stay on existing FS scheme
Teachers up to further 3.5 years away have tapered protection. Each month younger than full protection cut-off, they lose 2 months of protection
Everyone else switched into career average on 1 April 2015
FS NPA 60 Scheme Member
Age at April 2012
Age when moving to CA Scheme 50
Stays in FS Scheme
49 years 6 months
58.5 (1 April 2021)
49 years
57 (1 April 2020)
48 years 6 months
55.5 (1 April 2019)
48 years
54 (1 April 2018)
47 years 6 months
52.5 (1 April 2017)
47 years
51 (1 April 2016)
46 years 6 months, 1 day
49 years 8 months (1 June 2015)
46 years 6 months
49 years 6 months (no protection)

8. Interaction between FS and CA pension rights
Post 2015 most teachers will have FS pension and CA pension
Final salary based on salary when exit teaching, not salary in 2015
Members can take FS pension in full at current NPA (but must end contract (or opt out of scheme))
If a member takes FS pension at (or beyond) FS NPA – can take or leave CA rights
If member takes FS pension before FS NPA (ie as an actuarially reduced pension) – member must also take CA pension rights

9. Operation of career average scheme
CA pension based on pay – every payslip counts!
Fragmentation of education system risks lower administration standards
Vital that members frequently check and correct records. Records assumed to be correct unless evidence to contrary
Members should keep payslips, P60s and TPS pension statements

10. More pain ahead
Employer contribution currently 14.1 per cent, will rise to 16.4 per cent from September 2015
1.4 per cent increase in Employee NICs from April 2016
Abolition of ‘contracting out in April per cent increase in Employer NICs
These changes will have a knock-on effect

11. Conclusion NUT still in dispute over pensions
3.2 per cent contribution rises since April 2012 outweigh 2013 & per cent pay rises
68 is too late – and young teachers may have to work into their 70s
Cuts a real possibility due to employer NIC increases and increases in employer pension contributions
Support the NUT’s ‘Stand Up For Education’ campaign