Pensions are a common part of financial planning and, whilst not everyone will have one, the vast majority of people who are carefully looking to the future will have a pension in place.
This is doubly true for teachers. Typically, many teachers find themselves with more than one pension; the Teachers’ Pension Scheme, administered by Teachers’ Pensions on behalf of the government (your employer), an Additional Voluntary Contribution (AVC) scheme and one or more private pensions, often in the form of a Self Invested Personal Pension (SIPP).
This is not dissimilar to many other professions. Often employees will have a workplace pension and a private pension or pensions which they administer themselves. However, there are elements to the arrangements for teachers and senior education professionals which are different to how pensions are handled in other industries.
The Teachers’ Pension Scheme
Whilst other employers will have a wide range of pension schemes from which to choose when setting up a workplace pension, your school has only one: the national Teachers’ Pension Scheme.
All teachers who work for the two year qualifying period will be automatically entered into the Teachers’ Pension Scheme. From this point on, both you and your employer will contribute to your pension.
Contribution rates for the Teachers’ Pension Scheme
Contribution rates tend to change marginally each April. For the April 2016 tax year, the rates are shown below.
University and college lecturer pensions
If you are a senior education professional teaching at a higher education facility, then it is likely that you are employed by the institution, rather than by the government. In this scenario, the institution is likely to have a workplace pension in place. This essentially replaces the teachers’ pension your colleagues in primary and secondary school receive. Whilst the pension is likely to be different, however, the questions you have will often be very similar.
Creating clarity for teachers’ pensions
With a workplace pension of some sort in place and, potentially, a SIPP and other investments, it can be difficult to know exactly what you’ll be due in retirement, when you can retire and how you’ll collect your income.
These questions are further complicated by recent changes. The teachers’ pension, for example, has relatively recently changed from a final salary structure to a career average earnings structure, though members who were enrolled in the scheme before a certain date may still be able to claim final salary benefits. With this sort of change it can be very difficult to stay on top of your pensions and have a clear idea of the picture at retirement.
Choosing a retirement that suits you
Retiring as a teacher or senior education professional should be a happy time, but for many it can lead to a surprising amount of anxiety and sleepless nights!
We have covered some of the reasons for this – uncertainty around income and the state of your pensions, for example – but once retirement starts approaching there will be many more questions to answer.
Many education professionals, for example, choose to work on a part time basis, or retire only to decide that they wish to teach again. How does this impact your pension and your earnings?
Whilst you have been working and accruing your pension and savings, you might have had one eye on early retirement. But can you still access your full pension if you do this and how will it impact your income and the things you want to do in retirement?
Pension guidance for teachers which makes a difference
We’ve been helping teachers and professors to answer those difficult questions about their pensions for many years. Our experience, combined with the common problems we know you face, help us to give you the right guidance regarding your pensions, leaving you with peace of mind in your retirement and beyond.
If you have any question about your pensions – no matter how big or small – then why not contact us here for an informal chat?