TPS - Letter 1 October Changes - Reviewed

[@shineyrow9001]

Logged on this morning to see a notification of a new video from David. What a good way to get some information while sipping on a cup of coffee on a Saturday morning! If anyone doesn't know whether they are impacted by McCloud / transitional protection then they can log onto TPS and there will be a banner on their 'overview' page telling them if they are or are not affected.

[@VMJB-x5c]

Many thanks for this, and all other videos, David. Very helpful indeed.

[@giorgioganis363]

Very helpful video, thanks! I'm still confused about what happens when someone has a portion of their pension in the 60th Final Salary (NPA 65) and the rest in Career Average (NA 67). If this person retires at 65, would they get the 60th portion without actuarial reduction, but the CA portion with a 2-year reduction? What if they retire at 67? Would the 60th portion be boosted (actuarial enhancement?) because they waited for 2 extra years? I have not been able to find a conclusive answer to this. Cheers.

[@dfountain]

Early buy out ONLY applies to pension built up in the CA scheme, but I don't think that is what you are asking. The 60th scheme DOES have enhancement for taking the pension later than 65. The document that covers this is here: www.teacherspensions.co.uk/-/media/documents/member/documents/factors/retirement/late-retirement-factors-july-2019.ashx However, the 2019 factors are due to be updated so there may be some changes, though likely to be small ones.

[@giorgioganis363]

@@dfountain From what I understand, this uplift does not apply to deferred members... So, it would not apply if you stop working, say, at 62 and wait until 67 to get your NPA65 portion of the pension. That seems a bit unfair because a 67-yo will get fewer pension checks than a 65-yo, statistically, regardless of whether they are deferred or not.

[@jonathanmannering7576]

Just discovered this channel following the TPS letter yesterday. Thanks for providing such useful information, it really is such a great resource and I'll be recommending to colleagues. I've now seen most of your recent videos including the one on transferring pension into the TPS which is now very relevant to many teachers following yesterday's letter. I wonder if you've any comments on the general pros and cons of transferring moneys from other pension funds verses purchase of extra pension (perhaps funded from savings)? Both now seem to be an option.

[@dfountain]

A lot of what you are asking heads into the area of giving "advice", something that I am not qualified to do, though I am happy to share my opinions and thoughts. The calculations I have done on this show that the amount of pension you can get in the TPS from transferring other pension funds OR from buying AP are, essentially, the same pound-for-pound. There is one big difference though. A transfer from an existing pension fund doesn't count against your annual allowance whereas buying AP does. The annual allowance calculation is a little tricky and whilst an allowance of £60k may sound difficult for many (if not all) classroom teachers to achieve, the way the TP's contribution to this is not straight-forward, involving multiplying the values of the pension at the start and end of the financial year by 16, adding on the lump sum and then taking into account the previous year's inflation figure. Last year's inflation figure of 10.1% though does work in favour of larger increases this year though. The main pro of transferring into the TPS is that you are "buying" a full index-linked and guaranteed (by the Government) pension for life. The cost of which is generally more expensive if you look to buying annuities in the private sector (if you can find a comparable annuity that is!). Certainly if you have small pots elsewhere this may be attractive if you are looking for a guaranteed income. The main con of doing this is that once you have transferred the pot into the TPS you no longer have any claim on that money. You have bought and paid for a "promise" from the Government to pay you in the future. If you die before taking them up on that promise the money you had in the other scheme has "gone". The TP cannot be "left" to anyone, though there are rules that allow it to pay out what are called "survivor" pensions. Generally a partner would get 37.5% of the value of the pension for the rest of their life and any under 17 children get at most half of the partner's figure but only until they reach 17, extended up to 23 if they remain in full time education . Whereas if you didn't transfer the private pension pot into the TPS it could be left to whoever you like, in full.

[@LIZ-pp6jo]

I’ve gone through all of my messages on TPS and there’s no letter. I have secure messaged to ask where my letter is. I know I am affected, it says so on the banner.

[@user-xr9zf5fb5b]

did you recieve your letter? I have logged on and have no letter.

[@LIZ-pp6jo]

@@user-xr9zf5fb5b No. I still haven’t received any communication from TPS. When I phoned I was told I am not a priority as I have already retired. TPS are prioritising those who haven’t yet retired but will be retiring soon.

[@rosepetal45]

Received my letter and was waiting for your video😅 Thank you 😊

[@jonathanmannering7576]

Just seen my new “2nd October” statement, with the numbers being pretty much as I expected. I was in the retire at 65 scheme only before being moved to the average salary scheme. What surprised me was what happened when I worked out what the actuarial adjustment on my pre- 2nd Oct figures was for me to take the average salary pension at 65 (from you previous videos I believe you said this was 3% per year). It would seem that I would be better off doing this rather than using the McCloud Judgement numbers to take all benefits at 65. Might many people be in this situation? Perhaps I need to use a different reduction percentage to go from 67-65 in the average salary scheme?

[@dfountain]

Yes, this is quite common for those who were in the NPA65 final salary scheme if they are on a fairly level salary throughout the final years of the employment. The final salary scheme WOULD benefit more if the salaries were rising in the final years but otherwise the scheme can fall behind the career average scheme for two reasons. 1) The accrual rate it the CA scheme is slightly better than the NPA65 scheme at 1/57th compared to 1/60h 2) The CA scheme gets a bonus of 1.6% annually added to previously accrued amounts if you are still teaching. So, whilst the NPA65 scheme will have a lower reduction factor this can be more than compensated by that higher accrual rate and several years of that 1.6% annual bonus being added to the CA scheme.

[@jonathanmannering7576]

Thanks for this. Any idea if the TPS will tell people this when they come to take the option between the schemes at retirement? If they only give the McCloud numbers for retire at 65 and the pre-McCloud numbers for retire at 67 people may make sub-optimal choices! Does it merit one of your excellent videos or are not enough people effected?

[@dfountain]

Possibly, I've worked on a spreadsheet to look at the numbers: docs.google.com/spreadsheets/d/1zMudzj8HY0N6T45bnIUWd35U1MhezQZSnWcnbzALu0I/edit?usp=sharing I do need to look at doing one that will look at taking the final salary scheme at their normal age and leaving the career average until its normal age.

[@jonathanmannering7576]

Thanks. Great spreadsheet. Very useful.@@dfountain

[@joannalashly3226]

Thank you for this. I had no idea that there was a letter until alerted by an ex colleague and I then spent about 5 hours trying to log onto the TPS website - even the agents could help me - to find that my employment history had gone! I guess I'll be back trying tomorrow morning.

[@dfountain]

Good luck!

[@stuart6894]

Hi David, just a quick question: I logged in to TPS this morning to see the revised statement and I was not surprised to see the statement amount decrease (80th FS increased and CA went down - I have 23 years of service, 52 years of age), but what was a surprise was what the total amount represents as a % of lifetime allowance - this decreased from 41% to just over 38%. Any idea why this would decrease? Just curious...

[@dfountain]

Yes. The LTA is based on multiplying the annual pension by 16 and then adding on the lump sum. As the career average scheme does not have an automatic lump sum, you would have to opt to sell some of the pension to get a lump sum, it is generally a higher pension figure. This larger figure multiplied by 16 exceeds the lower one multiplied by 16 and with the lump sum added. The CA pension figure is also based on a retirement at 7-8 years later than the FS pension and this means it also "looks" bigger to the LTA calculation.

[@rjenks2]

Great, clear, helpful videos David. TP website said I am not affected but when I phoned TP an advisor said I should be considered! I have pensions contributions in all three categories ( 80th 1991-1996; 60th nov 2013- march 2015; and CA April 2015- Nov 23). Some of these times were supply or p/t and my career break was aug 1997- nov 2013 so more than 5 years. The reason given by message is that I am not affected because I wasn't in employment on 31 March 2012 when I was working in a pre-school not in TP. Do you know whether it is possible to challenge this or has my career break damaged my pension options in ways that I could not have anticipated at the time?

[@dfountain]

Yes, if your employment was not one where you paid into the TPS then it won't be considered. The break of more than 5 years was brought in, I think, in 2007 with the introduction of the 60th final salary scheme and as such means your return in 2013, at six years, means you are taken to be a "new" member of the pension scheme at that time and therefore NOT eligible for the McCloud remedy. This is because anyone, no matter their age, who returned in such a fashion would also be treated the same and hence there is no age discrimination - as bizarre as that seems! If the pre-school employment WAS one where membership of the TPS was possible but you were BANNED from joining the TPS then you may have a case for getting that service re-instated in the pension scheme. However, the requirement for doing this is that you would need to have been prohibited from joining and not just that they didn't put you in it.

[@lm7074]

Audio (volume) seems very low.

[@dfountain]

Strange, the volume of this appears similar to that I get on other videos from KZbin

[@MS-yy2dh]

@@dfountain It is definitely lower than other videos for me.

[@varixman]

Hi again David. My final question(s) is: what if I wanted to leave the profession earlier, say at 58, and then claim at 60? This is sort of my plan, leave teaching at 58, survive as best as I can from savings, private tuition, etc... and then claim my pension at 60 to reduce my actuarily reduction for retiring/claiming earlier, reducing said reduction with the buy out. Is this possible? I have had a look at your spreadsheet but I am not entirely sure about the info at the bottom, I am afraid...(ie: years to recoup outlay). Do I need to work for a minimum number of years depending on previous service (ie: 13/14) for the buy out? I am sorry if I am asking the obvious but I am a little confused about this in particular. (Just in case it helps with the calculations, I have been teaching for 14 years) Thanks!

[@dfountain]

The "years to recoup" are a guide to how long it will be before you recover the value of the money that you spent. For example, if you handed over £100 now and the scheme promised to pay you £5 a year when you retired because of it then it would take 20 years before you got back the £100 that you forked out at the start. (As the pension is index-linked this kind of sum is quite simple to do because the figures you are getting *should* have the same buying power in the future). As for your plan to leave but not take the pension, this is a very valid method to see the annual amount you get increase, and, if you intend living longer than the average person, will result in you getting more in total out of the scheme.

[@dfountain]

The Buy Out only applies to the career average pension, and if you are doing it now will only apply to the period from 1 April 2022 (presuming they are backdating the election, and costs, to when you are now classed as having entered the scheme). There is no minimum number of years you have to be in it but it will only have effect on the pension you build up whilst you are paying the extra monthly fee. If you stop paying the fee then the reduction will only be applied to the amount built up to that point and then the normal reduction applied to any subsequent amounts you added to the pension. The monthly fee depends on the age you start at and is somewhere between 0.83 and 0.98%, per year that you are buying out. In return, for example if you bought out TWO years then if you claimed the pension at 58 you would get the reduction rate for a 60 year-old.

[@Sageshine]

If I know that I will have to be applying for early retirement at some point between Jan and March 2024 (by early I mean that I am 62 now and my NPA is 67), can I still apply for early buy out? If so it would be a last minute bolster for my monthly pension payout/possible lump sum. No point in trying to do the maths if this isn't a solution. Tried to post on the FB group but won't allow me to add anonymously at the moment.

[@dfountain]

Yes, you can apply. As to whether it is worth it or not really depends on how long you will live for. You pay a fair bit now and as a result your pension will be a little bit higher. If you live long enough for that little bit extra paid every year to outweigh the initial amount you pay now then it is probably "worth it"...I am working on a video to go through the maths of the Buy Out option at the moment and hope to have it up today.

[@cdbecdbe2392]

Hi David, what I've been wondering, and you mentioned it in another reply, is will we be able to buy AP in the old scheme (as wanting to finish before 60) and will the option be time limited? I get the feeling TPS want to get the whole thing put away asap. And i know you may not be able to answer, but would buying AP in the old scheme be better than in the new? (Retiring at 57 with about 27yrs old and 7 in new) - we're all about covering that 10 year gap before the state pension kicks in. Thanks as always.

[@dfountain]

Yes, I am awaiting one critical piece of information regarding the revaluation of AP bought "retrospectively", but doing this appears to be much better value than buying AP in the current scheme. This page has the link to the application form and a few of my comments: dfountain.co.uk/retrospective-additional-pension-purchase/

[@iannock4507]

Another very informative video. Your videos have been so useful in helping my understanding of TP. Are you going to look at some examples of buy back years etc ?

[@dfountain]

Yes, though we cannot buy "years" as such. The new regulations do say that we can, if we can prove that we would have considered doing it at the time, retrospectively buy "additional pension" in the old final salary scheme. We have yet to see the details on how we can apply for this and what kind of proof will be required. There is a time limit for such applications, set at 6 months from 1 October. Perhaps this is why the option to buy "additional pension" is included in this letter.

[@iannock4507]

@@dfountain I have just turned 55 and thinking of taking my pension in a couple of years. Obviously, I will take a big actuarial reduction on the career average part as my NPA is 67 on this. I am trying to calculate if it’s worth investing in one of the 4 options over the next couple of years ? Your videos are so clear to understand when you use actual figures and scenarios. Thanks again for all your support

[@davidgeorge7819]

Thank you! Your videos are SO useful.

[@dfountain]

Happy to hear that!

[@chrishumphreys3407]

Thank you for explaining clearly the options available as a result of the TPS changes. I am currently 51 (52 in March) and intend to take my pension early at 55. Do I need to make TPS aware of my intentions at this time given the time sensitive options you have explained? Many thanks for your informative videos.

[@dfountain]

Yes, the time you have to take them up on any of the opportunities starts ticking from 1 October. To transfer other pensions into the TPS you have to complete this before the end of next September. To apply for "early buy out" you must apply before the end of March 2024 The faster accrual they have not put a definitive time limit on and it is not clear if you this means backdating the FA option to 1 April 2022, The normal time limit for opting for FA is ONE MONTH when you join the scheme, so this may have to be completed by 1 November - but I am only guessing if that is what is meant by this! The additional pension purchase also has no definitive time limit explained in the letter. AP can be purchased at any time, it is not limited to just "new" entrants so no time limit currently exists anyway, so I am not sure why this is included here...UNLESS...this is part of another "opportunity" that the legislation says must be made available to those who were moved into the career average scheme before 1 April 2022. That is the option to retrospectively purchase AP in the final salary scheme if you can show that you would have taken up that opportunity at the time. This option IS time limited, applications have to be made within 6 months, so again before the end of March 2024.

[@chrishumphreys3407]

Hi David, Thank you for your reply. So, just to be clear, I need to inform TPS of my intentions to initiate an ‘early buy out’ at aged 55 by March 2024? Is that right?

[@dfountain]

@@chrishumphreys3407 You have to APPLY to pay for this by the end of March 2024, yes. They are not concerned about the age you intend to retire, the cost for this is based on your age when you start paying for it and is deducted each and every month until you leave. The rate is somewhere between 0.83% and 0.98% (for a 51 year-old it is 0.89%) This is a sheet I did to work out the "value" of doing it: docs.google.com/spreadsheets/d/1NYTK-XSScUVn0EE95M4k1ozzumgZfEQluXOYtIbNCkw/edit?usp=sharing

[@surfe618]

Hi David I took a screen shot of my pension statement before the October change and have compared it to the new one. However, now it looks like I will be receiving less (although the lump sum is higher). This has confused me, as I thought that the McCloud judgement would be beneficial (I’ve been teaching for 23 years, age 47, hope to retire at 57, if that context helps). Am I missing something? Thanks

[@dfountain]

The most common thing that is overlooked is that you may be getting a bit less from the final salary scheme but it would be paid for an EXTRA 7 YEARS... This sheet may help you compare "apples with apples": docs.google.com/spreadsheets/d/1zMudzj8HY0N6T45bnIUWd35U1MhezQZSnWcnbzALu0I/edit?usp=sharing

[@surfe618]

Ah - I hadn’t thought of that! Much appreciated and thanks for the content, it’s excellent

[@Paul-ov5br]

Thank you for the helpful video. Do you know if you can buy additional pension even if you were a deferred member, not yet retired, but haven't been teaching since 2018. The factsheet produced seems to imply you can.

[@dfountain]

Yes, this is something that I am fairly interested in as we too made alternative investment arrangements rather than buy additional pension in the years leading up to when we left because it would have been in the NPA67 career average scheme rather than the NPA60 final salary one, however this doesn't appear to be the focus of this letter. The new regulations however DO have, well at least the Government's response to the consultation on the new regulations DOES have, reference to being able to RETROSPECTIVELY purchase NPA60 Additional Pension and I quote "80. The proposed regulations also made provision for eligible members with remediable service to apply to retrospectively purchase legacy scheme AP for the remedy period. The member must be active, deferred or retired (this provision does not extend to deceased members) and will need to satisfy the scheme manager that they would have entered an arrangement to purchase legacy scheme AP if they had been in that scheme at the time." assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1173440/Teachers_Pension_Scheme_transitional_protection_regulations_consultation_response_.pdf Possibly THIS is why the option to purchase AP is written in the letter - but it certainly lacks clarity. The timescale for making the application for such a retrospective purchase is 6 months from 1 October, but I have not found a form specifically designed for this purpose and when I asked TPS how to do this was told that is wasn't possible! I suspect that however is just am ill-informed opinion from one member of the frontline response team given that the new regulations do make it clear that we should be able to.

[@Paul-ov5br]

@@dfountain Thanks so much for the information, that's very helpful. I will have to have a chat with TPS. If you get any news on this please let me know, or please do a video on it. Thank you.

[@12newpark]

I too would be interested in this. Thanks for the informative video Dave

[@FionaTingle-tu2ty]

Hi David thanks for your very useful video. Not sure if you can help but I have 2 years of local government pension from when I was a TA in the middle of my 30 years as a teacher. Would it be beneficial to swap these into the TP before September? How can I work out if that would be better for me? Thanks again

[@dfountain]

I cannot tell you if it would be better or not but would suggest that you ask for a quote as this does not commit you to anything. Just be aware of any changes in the conditions as well as the £ values you are given, such as the ages at which each scheme would have. If your service in the LGPS is less than 2 years, even by a single day, then that may not have qualified as a pension and in that instance I would imagine that a transfer would be more beneficial.

[@FionaTingle-tu2ty]

@@dfountain thank you it’s definitely 2 years to the day as if it had been any less I would have been able to withdraw it when I phoned them up but they said I can claim when I am 67

[@dfountain]

Depending on your age you could claim it as early as 55, it would be reduced to account for it then being paid out for those extra years.

[@michaelwinfield9255]

I took phased retirement in September and have had a similar letter. Could you explain what should happen for those already retired?

[@dfountain]

The letter sent to those who are in phased retirement is not something I have yet seen, and, to be honest, I do not know what is going to happen with regard to your timescale for getting the RSS and having to "make" the decision regarding committing the remedy period to one scheme or the other. I would love to see the letter you have received, would you mind sending me a copy please - to [e-mail] (note the d after the @) As regards to the "new" opportunities, yes, these should be available to you in the same fashion as everyone else who is now being treated as entering the career average scheme on 1 April 2022 but with the timescales for those opportunities being started from1 October 2023. So, if you wish to pay for Faster Accrual you have until the end of March and if you wish to transfer other pensions into the TPS Career Average scheme until the end of September 2024 to complete that process.

[@solosailor744]

Great video. Thanks. How do I calculate/ find out if transferring from another company pension into TPS is worth the move? I have 9 years in an excellent scheme and wonder about a transfer. I also have some FSAVCs separate from the Pru. Can I transfer FSAVCs into the TPS?

[@dfountain]

The process involves asking your pension provider to give TPS a cash transfer value and then TPS tell you how much pension that will "buy" you. At that point you can decide if it is worth it or not.

[@EnglishDepartment-b9y]

Hi David, does that now mean your CA to FS calculator is now null and void? If so do youhave a new early retirement calculator?

[@dfountain]

Yes, pretty much. The new (rollback) statement has a more definitive figure for this period being restored to the final salary scheme...I suspect I may need to do one that lets people work out what their CA pension would have been for this period now they no longer have access to the old statement! I do have this one that lets you compare a like-for-like early retirement if you had the foresight to save a statement from earlier in the year: docs.google.com/spreadsheets/d/1zMudzj8HY0N6T45bnIUWd35U1MhezQZSnWcnbzALu0I/edit?usp=sharing

[@janiewoodsie]

Do I need to have received the remedial service statement and made my choice before applying for buyback? My benefit statement has now reduced by £700 after rollback (due to being part-time). I am 60 and would like to retire at 65.

[@dfountain]

No. However, I have yet to see any form or mechanism for making an application to restore service in the remedy period where the teacher opted out because of the introduction of the career average scheme. You will also need to check carefully whether you need to maintain a break in that period in order to protect a higher (after inflation is accounted for) value final salary in that period prior to your leaving the scheme.

[@janiewoodsie]

It's all so complicated! Your reply raises even more questions, but thank you.@@dfountain

[@SalmaBora-f4o]

Very useful. I have a question-I have £36k in various private pensions and I’m trying to work out if it’s worth transferring into the TPS. I’m 58 with NPA67 (CA) NPA60 (FS). I intend to retire at 60. How do I work out if it’s worth my while transferring in or not?Thanks in advance

[@dfountain]

I am not a financial adviser so I cannot simply tell you what is best, however, this is what I would do. 1) Ask TPS for a estimate of how much they will give you for your pots (This is the sheet I did but I believe the factors used are about to be updated so it may not be accurate: docs.google.com/spreadsheets/d/12WX0PByWbDSDFHAx68UFamWatPzFcSdpZBSYLZU8Ojc/edit?usp=sharing) 2) Consider waiting to see if you get a better deal from buying AP in the old final salary scheme (this is an option that is supposed to be opened to those who were moved prematurely to the career average scheme between 2015 and 2022, but we have no details as yet.) 3) See how much your £36k could purchase as an annuity on the open market. You can tailor that to your needs but if you want to compare like-for-like then you would need to look for a fully (not capped) index-linked, shared life (37.5%) annuity with a 5 year minimum term. Alternatively, if you were considering leaving "early" then you may think about deferring the TP and living off the private pension via a drawdown plan. I explain that here: kzbin.info/www/bejne/epbPaWiIe8qtZ5Y

[@juliewatts8391]

Hi David, thank you so much for your videos. However, I still can't get my head around it all. I have only been paying in for just over 12 years. I've also compared from my forecast last month, and although the lump sum has increased, it looks like I will be getting less. I'm in Adult Education, and along with everyone else, didn't get any pay rise until this year. I've also been at the top of my pay scale for the last 5 years or so. I am 61, and would like to retire at 62. (My FS age is 65, not 60 as it seems for those in mainstream teaching?) I have no idea how to work this out now with all the options. I think I'm going to be worse off, and maybe take phased retirement instead. I don't have a head for numbers I'm afraid. Like others, I've asked TP (phoned the other day) for a clearer understanding, but they just told me to read the paper and watch the videos. Any further help would be gratefully received as to how I can make this a positive for me. .

[@dfountain]

If you've been paying in for 12 years, that means you started around 2011 and would be in the final salary scheme that has NO automatic lump sum. If you want to get in touch directly and let me take a look at your statement I should be able to help you work out what the numbers mean for you. My email is [e-mail] (note the d after the @)

[@juliewatts8391]

Thank you David, I've sent the information; both the legacy and the new. your thoughts/opinions, if you are able to shed light on it all, would be gratefully received :)

[@tommylne20]

Thanks for another really useful video! I think I am similar to @SusanRitchie. I am a deferred member having stopped teaching at the end of Dec 2022 after nearly 30yrs service and am now doing some independent freelance work. I am now trying to get an accurate estimate if I were to take my revised FS60 pension when I turn 58 in December 2023 so I can I have clear idea of my base income figure as I do my freelance things. The TPS calculators are not helpful for deferred members I find, and when I asked TPS to give me an estimate they sent a complicated calculation sheet that I am not confident will give me an accurate figure. I used your excellent spreadsheet from the McCloud judgement video and this gave me another figure. Do you think this is still the most accurate estimate? I am seeing an FA but I'd appreciate your view.

[@dfountain]

Your statement should be the best indicator of what you will be offered, indeed, unless you have a superior hypothetical calculation based on an earlier break in service, it should be very accurate. The new statement (the "rollback" statement) that's been online since 1 October should have the amount you will get from the "final salary" option. If you have one from earlier this year then that would be close to the other option you will be given. This sheet is the one I would use to make the comparison if you have both statements: docs.google.com/spreadsheets/d/1zMudzj8HY0N6T45bnIUWd35U1MhezQZSnWcnbzALu0I/edit?usp=sharing

[@tommylne20]

@@dfountain Many thanks for the prompt reply - I'll do the calculations again and hopefully get a better idea.

[@TestTTTSN]

Hi Dave - as ever a really useful video. Thanks for making them and keep them coming! Quick question….is it possible to transfer teacher AVCs into the TPS?

[@dfountain]

No, I believe that is not allowed....they I don't know why, and I believe you CAN transfer the AVCs into any other type of private pension...and then, from there into the TPS.

[@TestTTTSN]

Thank you

[@chaddesley3]

Am I too late to 'Buy out'? I started TPS in 2003 and was transferred to career average in 2015. I have attempted to put dates into the online application but to no avail. Any help gratefully received.

[@dfountain]

No, you are not too late...you may be a little "early" though ;) You have until March 2024 to apply for the "buy out" option but I have not yet seen a form that will allow us to make such an application. This may be due to the fact that these changes are NOT coming in until 1 October - hence my comment about being too early.

[@chaddesley3]

Thanks, I have sent a message to your site for a little more clarification and my situation. I'm after a little friendly 'staff room' guidance. Thanks again@@dfountain

[@varixman]

Hi David. Thank you for your videos, they really have helped me understand the scheme much better. I work full time and am affected by the McCloud judgement therefore I have service in both schemes (final salary + career average). My NPA is 67 and I'm 48. For what I have read, the buy out rate seems to depend of your age, etc... If I were to buy out the actuarial reduction for these two years, would you be able to tell me roughly by how much (as %) would my pension contributions need to increase? Thanks!

[@dfountain]

This sheet can help: docs.google.com/spreadsheets/d/1NYTK-XSScUVn0EE95M4k1ozzumgZfEQluXOYtIbNCkw/edit?usp=sharing At 48 the extra amount you are asked to pay is 0.88% per year. To buy out 2 years that would therefore be 1.76%. Bear in mind that the early buy out ONLY applies to the amounts in the career average pension scheme. It has no effect on the final salary pension.

[@varixman]

@@dfountain Thank you for the link to the spreadsheet and information, David. I really appreciate you taking the trouble to respond to my post.

[@SHALL-n3i]

Thanks David for what are always really useful and informative videos. I am affected by the judgement, have been teaching since 2011, and am looking to retire next summer aged 65. During the period 2019 to 2022 I was paying faster accrual & also purchased additional pension. My statement since the change shows a reduction in pension (expected) which I assume are due to these additional payments not showing as they can't be made into a final salary scheme. My understanding is that when I retire I will be given the two options you have mentioned which will include these - is that correct?

[@dfountain]

You should actually be contacted before then to ask you if you want to convert these 2019-2022 payments to "additional pension" in the NPA65 pension scheme. If you do and then, later when you do retire, decide you want to put 2015-2022 back into the career average scheme you will convert them back again!

[@SHALL-n3i]

Thank you for that.

[@davidgeorge7819]

Thank you for your excellent videos - you have helped us enormously. One question, if a teacher left teaching - can they transfer a personal SIPP into TPS please?

[@dfountain]

No. You have to be a current member of the scheme and transfers "IN" to the scheme have to be completed in the first 12 months of joining, or re-joining, the scheme. This suggests that if a teacher has left the scheme then they CAN transfer a SIPP in so long as they re-join the teaching profession, and the TPS of course.

[@joecarr-hill3498]

Thank you David, I’m 55 next month and have applied for my pension (very early!). Is it too late to take up those two options? Perhaps you have to still be “in service”?

[@dfountain]

It's not clear from this letter as I think it is focussed solely on those who are still in the scheme. However, the principle of the legislation and changes is to prevent you being disadvantaged because of the illegal manner in which you were moved from one scheme to the other and in that sense it should be possible to retrospectively take up these options.

[@user-xr9zf5fb5b]

@@dfountain Hi. I have just started to look into my pension. I Have not received a letter from TPS re transitional changes and know that I am affected. Do you think I would still have the option of buy out and buying retrospective AP. How would I have known about these changes without being informed? I am still in active service. Thanks in advance

[@ruthedgerton539]

Having read the letter and watched your very useful video I'm unfortunately still none the wiser on the answer to my question. What do you do if you want to stay in the career average scheme for 2015-2022? For me personally it would be seriously disadvantageous to revert to the final salary scheme for those years.

[@dfountain]

What do you do...nothing until you come to claim the pension. You don't make the choice and, if you are eligible, WILL have that choice, until you come to claim the pension. It is at that point they will tell you how much you will get from the two options and THEN you choose. Hopefully this means you shouldn't be able to make the "wrong" choice!

[@MS-yy2dh]

Thank you, Dave. I am also confused by the inclusion of accrual rate and buying additional pension. As you say, these can be taken at any time anyway - or is that not the case for buy-out? For the buy-out, I think this must be done within six months of first entering career average pension. So, I assume due to the roll back we now have 6 months from 1 Oct 2023 to do this as clearly otherwise the opportunity has been missed. Is that right? Also, do you know how much it costs to buy-out a year? As for accrual, maybe they are going to backdate this to 2022 somehow? By the way, the sound on the video is quite low.

[@dfountain]

Early Buy Out CANNOT be bought at any time. You can only do this in the FIRST 6 months of joining the scheme. As for the costs, they depend on how old you are but range from 0.83-0.98%: I have, of course, a spreadsheet to show this: docs.google.com/spreadsheets/d/1NYTK-XSScUVn0EE95M4k1ozzumgZfEQluXOYtIbNCkw/edit?usp=sharing (Just make a copy and you can then use it) I am presuming that the % will be based on your age back on 1 April 2022 and payments that you need to make backdated to that point as well - but don't hold me to that! Similarly for Faster Accrual, so yes, that may be the reason it is included BUT they don't put a time limit on applying for this to be backdated either which would have made sense if it was their intention to allow this.

[@MS-yy2dh]

@@dfountain Thanks for the correction and clarification. By ‘any time’, I meant that I assume the normal situation is that any time one joins they then have six months (is that correct?) and that the situation is different for the rollback as everyone now has six months from the fixed date of 1 October 2023. I suppose this is because we are now considered to be new entrants at some point within a period from 1/4/15 to 31/3/22, and that really the six-month period should run from a date within those seven years, but they have opted for 1/10/23 instead. Is that your understanding?

[@rachelbirkby8619]

Hi David, thanks you so much again for this valuable and helpful information. I have a large lump sum sitting in a SIPP performing very poorly at the moment.. I'm just wondering whether it I would benefit from transferring my pension to TPS before the deadline. Is there a maximum amount that you could transfer? Many thanks

[@dfountain]

I don't believe there is any maximum. What you should be comparing this to is the purchase of an "annuity", ideally one that is comparable to the TP - that is a full (not capped) index linked annual increase and a shared life element (37.5%) paid to any partner after your death.

[@rachelbirkby8619]

@@dfountain This is such useful information to be armed with when approaching a financial advisor. Thanks so much.

[@sebastianallon7055]

This is so helpful! Thank you👍

[@andyalty]

Am I correct in thinking if you planning on retiring early that its always worth taking the maximum buyout?

[@dfountain]

Unfortunately it all depends on how long you live for. If you die early then, no, probably not! This sheet can let you see how many years it will take for you to get back the value of your investment - make a copy to enter your own figures: docs.google.com/spreadsheets/d/1NYTK-XSScUVn0EE95M4k1ozzumgZfEQluXOYtIbNCkw/edit?usp=sharing

[@andyalty]

@@dfountain So if I populate the sheet. Do I focus on "Value of amounts after these number of years (in teaching)" i.e if I have 20 years left till my early retirement date?

[@dfountain]

@@andyaltyYes, this represents the value with the annual 1.6% bonus above inflation that is added each year that you are still in the scheme.

[@nihadelebiary3386]

Hi, I have been a teacher since September 2010 (second career) and I am 57 years old. My pension age is 67, can I apply to retire at 60 and how much will I loose?

[@dfountain]

You will have two parts to your pension. You have a final salary pension that has a normal pension age of 65 and a career average pension that does indeed have a normal pension age of 67. You can apply for both of these from the age of 55, so, yes, you can apply for them to start at 60. As for how much you "lose", my answer is that you don't start to "lose" until you are into your mid 80s. I explain this here: kzbin.info/www/bejne/f3u9gK2eoZh5fpo

[@32Louc]

I’m hoping to retire from teaching in 2025 at the age of 55. Would it be worthwhile trying to buy out the actuarial reduction or would the cost be so astronomical that it wouldn’t be worth trying

[@dfountain]

The cost is based on your age.- this sheet can let you see the costs involved and how many years it takes to get the value of your investment back: docs.google.com/spreadsheets/d/1NYTK-XSScUVn0EE95M4k1ozzumgZfEQluXOYtIbNCkw/edit?usp=sharing Make a copy of the sheet to enter your own figures.

[@Ethelredofhadleigh]

Hi David. Thank you for the excellent and informative films. It appears it is going to take up to 18 months for TPS to send us our revised pension options. Any idea why it is going to take so long?

[@dfountain]

Some of them are very complex but I don't expect them to take that long. 18 months is the MAXIMUM amount of time they have to provide EVERYONE with their RSS. We should start hearing of some receiving them this month.

[@Ethelredofhadleigh]

Thankfully mine is likely to be very straightfoward so I hope they get them out first. @@dfountain

[@dylansharp3086]

so does the 18 months start from 1st October 2023? Mnay thanks.@@dfountain

[@dfountain]

@@dylansharp3086 Yes, everyone MUST have their RSS before April 2025

[@dylansharp3086]

Many thanks for the clarity, much appreciated@@dfountain

[@stuford]

Hi David, I thought that the changes would mean that those affected would get to choose whether they would take all their pension as final salary or, after the roll back, final salary and career average but the letter doesnt seem to say anything about that choice. Is it still the case that we will get to choose? Cheers, Stu

[@dfountain]

There are two parts to the changes. This is merely the FIRST part. As most teachers will be better off with their service being counted in the final salary scheme it was agreed that immediately the new regulations were introduced that the default position would be for everyone's transition date to be 1 April 2022. This does not mean that they lose the right to "choose" the other possible date, that is 1 April 2015, but merely that until they can update the statements to show the value of BOTH dates they will only show the later date. The second part is where everyone who applies will be given the proper "remediable service statement" and that WILL contain the valuation for each of the two dates and then they will be asked to choose. The administrators have until April 2025 to get everyone's proper remediable service statements sorted, though hopefully it will be a lot sooner than that.

[@stuford]

@@dfountain Thanks David! Can I just ask another question? If a teacher has had sick leave in the last 12 months and the salary was reduced for a period of that leave will this affect the final salary calculation? Or is it still calculated as the best salary over the last ten years? Thanks again, Stu

[@dfountain]

@@stuford Sick pay, so long as you are receiving at least half pay is counted as full pay and as full attendance for pension purposes.

[@stuford]

@@dfountain Thanks David 👍

[@mikespike80]

I really appreciate your videos

[@SusanRitchie]

Morning David, I found your channel a few weeks ago and wanted to say how useful it has been thank you so much. I am a deferred member of the TPS and want to take my pension next year when I am 58. I'd like a forecast to help me understand what income and lump sum I'm likely to be looking at. However, when I contacted TPS, I was simply told to find a financial advisor and given what looked like a Government white paper to calculate my pension myself! I did speak to a FA, who said they'd need a figure from the TPS to work with. There's very little guidance on the TPS website for deferred members. Is the advice I was given likely to be a mistake do you think? What question should I be asking them when I next contact them please, so that I get the right information? Many thanks :)

[@dfountain]

Yes, if you want to send me your statement I can have a go at working out the figures with you. My email is [e-mail] (note the d after the @)

[@SusanRitchie]

@@dfountain Thanks Dave, I've just emailed you.

[@intransit2822]

Thank you 👍

[@AnthonyLlewellyn-j9k]

Again, thanks you really help make this clearer to understand. I'm looking to retire at 55 next June and have 25k put in another pension, will I gain by bringing this into the tps or does it just make my pension easier to manage. Also I have just had a redundancy and have 15k at hand would it be worth me investing this in buying extra years etc? Thanks once again

[@dfountain]

There's no such thing as "extra years", there used to be but they were considered too generous and were withdrawn and replaced with the newer options, currently "additional pension", "faster accrual" and/or "early buy out". They are not nearly as generous as there is no employer contribution towards them. You can use the flexibilities calculator on the TPS website to see how much £15k would buy you and then make your choice. Just be aware that once you have handed over the £15k you have bought a promise to pay you for life...if you die "young" then you, or rather your heirs, don't get that money back.

[@AnthonyLlewellyn-j9k]

@@dfountain thank you David, I'll use the calculators and take a look, it's a mindfield really isn't it when you're trying to future proof your finances. Thanks once again, Ant

[@WES2201]

Hi David! Could you give any indication of how these options would affect someone who leaves teaching before retiring?

[@dfountain]

Faster accrual adds a bit more each time you are paid to the pension. When you leave you are not being paid and so nothing gets added, but of course you are not paying into the scheme either. Additional pension can be bought with a lump sum or with monthly instalments. Bought with a lump sum your pension is increased by the amount you have bought. If you are paying by monthly instalments then you are given the choice when you leave, well you have to ASK to have the choice, to pay the remaining outstanding monthly amounts, or accept whatever proportion of the additional pension your payments up to that point would have bought you. For example, you buy £250 of AP and plan to pay for it over 10 years. After 1 year you leave, you can then either pay the 9 remaining years worth of payments to keep the £250 or you can accept it being reduced to £25 to reflect the fact you only paid 1 year. Early Buy Out - you have to pay this for the rest of your career but if you stop paying it early then it only gets applied to the amount of pension you had built up to that point in time. For example, if you worked for a year on a salary of £57,000, had bought out 2 years and then left at the age of 50, your pension would stand at £1000 at the time you left. Later, at 58 you claim that pension and it will be reduced because you are taking it early, but then the two years that you paid for WHILST building up that £1000 get used and so you would be given the reduction factor for someone aged 60 and not your actual age of 58. If you had returned to teaching before taking the pension and had built up another £1000 but had NOT paid the extra during that employment for the Early Buy Out then you would have two parts to this pension. The first £1000 would be paid out as if your were 60 but the second lot of £1000 would be paid out according to you being 58

[@WES2201]

Thank you. I think I just about understand that. What happens if we choose to do nothing? We’ll still receive the contributions between those years, right?