SCOTTISH TEACHERS' SUPERANNUATION SCHEME (STSS)

1. SCOTTISH TEACHERS' SUPERANNUATION SCHEME (STSS)

2. New Pension Reforms – 1/4/07 • Normal Pension Age (NPA) 65 for new entrants/pension based on 1/60th accrual rate • Revised calculation of Pensionable Salary • 2-Tier Ill-Health Arrangements • Purchase of Additional Pension Facility

3. New Pension Reforms • Phased Retirement • Benefits for Unmarried Partners • Commutation of Pension for Lump Sum 12:1 • Death Grant increased to 3 times Pensionable Salary

4. Definition of an Existing Member • Teachers who are current scheme members on 31 March 2007. • Teachers who have been out of pensionable service for more than five years but who return to teaching by 31 March 2008 will retain a NPA of 60 (irrespective of the length of break in service). • Minimum period of 30 days reckonable service or 60 days pensionable employment must be undertaken after a break in service to allow teachers who have a subsequent break in service to return at a later date and retain NPA 60 in respect of their future service.

5. Definition of a New Entrant • Members who join the STSS on or after 1st April 2007 with no previous service • Members who leave pensionable employment on or after 1st April 2007 and do not return within 5 years • Members who have been out of service for less than 5 years at 31 March 2007 but do not return within 5 years from the date of leaving • Members who have been out of service for more than 5 years as at 31 March 2007 and do not return before 31 March 2008

6. Normal Pension Age (NPA) • The NPA of 65 for members classed as New Entrants would only apply to any service after 1st April 2007 • Any service accrued before this date would have a NPA of 60 • The member would therefore have two separate pensions

7. Maximum Service • For existing members the maximum service is 40 years at age 60 and 45 years at age 70 • For new members the maximum service is 45 years at age 65. If the member works beyond age 65 their pension will be Actuarially Increased • In both circumstances no lump sum will be paid if the member is over age 75 – convert into pension, with no option to commute

8. Teachers who join the STSS have the right to request a transfer in of their previously accrued pension benefits • If the member Transfers In service from a Club or Non-Club Scheme then there is a time restriction of 12 months (after the date of starting) for the member to request the transfer • The Agency cannot accept a transfer value payment where the teacher has become eligible for the payment of retirement benefits from the STSS (has reached NPA) Transfers In

9. The Agency can accept Transfers in from: Club Schemes - Local Government schemes etc Non Club Schemes - Private Pensions/Stakeholder Pensions In order to apply to transfer in funds prior to retirement you should contact the SPPA and request a TVIN/APPL (These are also available for download from the internet) Transfers In

10. Transfers In • The Agency Cannot accept transfers of AVC funds • You can, if you wish, transfer AVC benefits to our ‘in-house’ AVC provider, Prudential. • These benefits will be payable by the Prudential and remain separate from your STSS pension. • Contact www.pru.co.uk/teachersavc

11. Additional Pension • Members (or employers on member’s behalf) can buy up to £5,000 pension throughout their career in multiples of £250 • Can choose whether this pension will count for dependants’ benefits • Doesn’t matter how many Past Added Years member has bought or is in the process of buying prior to 01 April 2007.

12. Winding Down • The WD option offers members within 4 years of normal retirement age with a minimum of 25 years teaching service the option to reduce working hours whilst maintaining their full time service entitlement • The 25 year period may include for qualifying purposes, a break or breaks in teaching service not exceeding 5 years in total • The last 10 years must have been full-time service immediately prior to WD • The WD employment must be equal to or more that 50% of FT service • Each year served under the part-time contract counts as one full year when calculating benefits • The final pensionable salary, for benefit calculation purposes, will be the salary received in the 365 days prior to entering WD employment re-valued to date of retiral • A return to full-time employment cancels WD contract

13. Pensionable Salary There will be a 2 year transitional period until 31 March 2009 where a comparison will be done on the new calculation method with the current calculation method and pay the most beneficial. EITHER The members’ salary in the last 12 months before retirement OR The average of the revalued best 3 consecutive years’ salaries in the 10 years prior to retirement

14. Benefits - Existing Members Only • If the member was in the scheme prior to 1st April 2007, the method of calculating benefits provided an annual pension and lump sum based on reckonable service and pensionable salary:- • Pension = Service x Pensionable Salary 80 • Lump Sum = 3 times the Pension

15. Benefits - New Members Only • If the member joined the scheme on or after 1st April 2007, the benefits will consist of an annual pension based on reckonable service and pensionable salary:- • Pension = Service x Pensionable Salary 60 • More to follow on lump sum later….

16. Actuarially Reduced Pension (ARP) • To apply for ARP (voluntary form of retirement) the member must be:- • An existing member - between age 55 and 60 • Or a new member between 55 and 65 • Employer must agree (although consent cannot be withheld for more than 6 months) • Members may wish to seek Independent advice as the effect on the reduction is permanent

17. Premature Retirement • To apply for Premature Retirement (with employers consent) the member must be:- • Existing Members – aged 50 or over • New Members – aged 55 or over • SPPA pay ARP and the employer agrees to pay mandatory compensation equal to the amount of the reduction. No loss to the member

18. Phased Retirement • From age 55 • Pension drawdown for all members (maximum 75%) • Must work in a reduced capacity for 12 months (reduction of at least 25% of previous salary) • Could be less responsible role and/or reduction in working hours • Can drawdown pension only twice before NPA • Benefits will be actuarially reduced

19. PIB (Partial Incapacity Benefit) Permanently incapable of teaching but capable of other work NO ENHANCEMENT 2 Tier Ill-health Arrangements • TIB • (Total Incapacity Benefit) • Permanently incapable of teaching and of any other work • ENHANCEMENT IS HALF OF PROSPECTIVE SERVICE TO NORMAL PENSION AGE • No enhancement if the member has been out of pay for more than 12 months

20. Preserved Retirement • Teachers who left superannuable service before age 60, and have qualified for payment of retiral benefits, can apply to have their benefits paid at Normal Retirement Age (or in some cases from age 55 on ARP grounds). • Whilst frozen in the Scheme the pension and lump sum will be index-linked to the rate of inflation • To start receiving the pension the teacher should contact the Agency 3 months before Normal Pension Age

21. Application Procedure • Applications should be submitted 3 months prior to the proposed retiral date or 4 months for Ill health retirements • Application forms and guidance notes are available from your Employers or on-line but must be routed to SPPA through the employer

22. Commutation • Existing member on 1/80th accrual rate will be able to commute an additional 19.64% of pension (i.e. additional to lump sum of 3 x pension) • New entrant on 1/60th accrual rate will be able to commute 35.71% of pension • Percentages calculated by Government Actuary and represent 25% of teacher’s ‘fund value’ after commutation • Commutation of lump sum is open to pension credit members (on Divorce)

23. Commuted Benefits – Existing Scheme • If the member was in the scheme before 1st April 2007 and was in pensionable employment on or after 1st April 2007, then the member can convert (Commute) part of their pension to receive a lump sum up to 25% of their fund value. The formula for calculating the maximum amount of lump sum is as follows:- (Pension x 20) + (Lump Sum x 20/12) 4.6667

24. Commuted Benefits – New Scheme • If the member joined the scheme on or after 1st April 2007, the formula for calculating the maximum amount of lump sum is as follows:- (Pension x 20) 4.6667

25. Commuted Benefits • These formulae represent 25% of the fund value and is the maximum lump sum the member can take • The fund value is based on the members Normal Retirement Pension and any Additional Pension they have purchased • For each £1 of pension commuted there will be £12 of lump sum paid.

26. Payment Information Lump Sum (members in the scheme prior to 1/4/07 only) Non taxable. Paid the day after retiral or; Within two weeks after calculation if late application

27. Payment Information • Pension • Paid monthly in arrears on the last banking day of the month. • Pension is taxed at the emergency rate until HMRC advise of the appropriate tax code. No need for P45 as this is sent electronically. • May be revised at a later date due to final salary/service details being received from the employer. • Increased in line with RPI annually.

28. Re-employment • If a teacher is re-employed out-with • teaching we do not need to know about this • A teacher may be re-employed after retiring but they will be subject to an earnings limit (not applicable to ARP) • The earnings limit is the difference between the • teachers salary rate when they retired, plus pensions • increase, less all pensions received for Teaching Service (including compensatory pensions) • Re-employed teachers will automatically be included in the Scheme unless they opt-out but will still be subject to an earnings limit

29. Re-employment • If the teacher earns more than their limit their pension may be reduced or suspended and any overpayment will be recovered. • If the teacher retired on ill-health grounds and returns to teaching their pension will be stopped. They can however continue paying contributions into the Scheme • Additional pension will be paid if re-employed for more than 1 years’ qualifying service • If less than 1 year, refund of additional contributions on • cessation of re-employed service

30. Death Benefits • Death grant increased to 3 x pensionable salary (where death occurs on or after 1 April 2007) • Accrual rate for survivor’s benefits will remain at 1/160th • For both new and existing members

31. Surviving Partner Benefits • Benefits for opposite-sex and same-sex partners for both new and existing members introduced on 1/4/07 • Service from 1st April 2007 will automatically count for surviving partner benefits (option to buy previous service must be taken within 6 months of making nomination) • Members must complete a joint declaration of partnership (must have lived with the partner for 2 years, be free to marry or form a civil partnership, be financially interdependent) • Spouses’/partners’ pensions payable for life (where teacher dies in pensionable employment on or after 1st April 2007 or upon death of teacher who retired on or after 1st April 2007)

32. Change of Circumstances • Bank Accounts – details to be sent in writing to the SPPA Payroll Section. • Changes to bank account details should be made be made in writing within the first 10 days of the month to avoid delays in payment. • Address changes can be accepted in writing by telephone, e-mail or fax.

33. Ensure you have the teacher's superannuation number to hand. You can then call the relevant team direct (see handout) Leaflets/Guides and further information can also be obtained from the Agency Web Site; www.sppa.gov.uk Keeping in touch

34. stsspen1@scotland.gsi.gov.uk 01896 893 000 stsspen2@scotland.gsi.gov.uk 01896 893 000 stsspen4@scotland.gsi.gov.uk 01896 893 000 stsspen5@scotland.gsi.gov.uk 01896 893 000 stsspen6@scotland.gsi.gov.uk 01896 893 000 stsspen7@scotland.gsi.gov.uk 01896 893 000 Argyle & Bute, Renfrewshire, Ayrshire, Dumfries & Galloway Aberdeen, Moray, Highlands, Grampian, Orkney, Shetland & Western Isles Fife, Falkirk, Tayside, Central Glasgow Inverclyde, Stirling Lanarkshire, Dunbartonshire, Borders Edinburgh, Lothians (including Colleges and Universities

35. Agency Contact Details SCOTTISH PUBLIC PENSIONS AGENCY 7 TWEEDSIDE PARK GALASHIELS TD1 3TE WEBSITE: www.sppa.gov.uk FACSIMILE: 01896 89 3214

36. We have tried to make sure that this information is accurate, but it is not a complete and authoritative statement of the Scheme’s provisions nor does it override the statutory regulations that govern the scheme.