Phased retirement

1. Phased retirement UCU branch meeting 19.2.2013

2. Types of retirement • Normal age retirement – NPA. Pensionable employment counts up to 75yrs. Unable to pay into TPS after age 75, even if working. • Phased retirement – work part time and access part of your pension. • 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. • Premature retirement – employer’s discretion. • Ill-health retirement – permanently unfit to teach before NPA

3. 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

4. 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

5. Benefits of phased retirement • No break in service • You do not lose accrued rights to sick pay, redundancy notice or redundancy pay • You continue to add further years of service into the scheme • You continue to be covered by death in service grant • Succession planning for employer • Employ newer staff on lower salary grade – cost efficiency • Employee continues as a member of TPS • Employer retains expertise of TPS member for several more years • 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

6. Example to illustrate • Member is 58 years old, salary is £40,000.  Has 20 yrsservice 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

7. Applying for phased retirement https://www.teacherspensions.co.uk/public/resources/~/media/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-and-procedures/a-z-results-page.aspx?idx=4133&idxltr=F&menupage=7152 Note: you are responsible for checking your pension contributions – no duty of care in pensions!