The gradual process of educating the educators continues. The consequences of the McCloud Remedy for the TPS are not limited to contribution levels. The re-implementation of the Career Average Scheme from April 2022 will be highly significant to any teacher with more than a few years until retirement, particularly as the scheme retirement age is now linked to the state retirement age.
As mentioned, working with schools brings various unique challenges. The following rules and principles will be useful to bear in mind:
- The abatement rule, how it applies on age retirement but not early retirement, and how it might impact teachers who want to continue working after taking benefits, particularly if they are full time. The rule limits the amount of pension income and salary receivable so that it cannot exceed the prior year’s “salary of reference”. This arcane rule can result in teachers unwittingly having some or all of their pension withheld by the TPS, but it is avoidable by taking early retirement, or mitigated partially or in full by returning part-time.
- The Government Actuary’s Department tables, published on the the TPS website, which can be used to assess the impact of early retirement, which differs in each of the three version of the the TPS: the two final salary schemes and the Career Average Revalued Earnings scheme.
- Moreover, if members are single and childless when they die in retirement, only a surviving parent or an unmarried sibling can inherit the pension benefits. Otherwise, the benefits are effectively lost.
- In a situation where members retire early for health reasons, there are various options available to them depending on the severity of their condition, including commutation to a single lump sum in lieu of all the benefits, including death in service, which is an occupational benefit provided by some employers. In such a situation, utmost care must be taken with any terminally ill member, because a commuted lump sum is likely to increase the estate and create an inheritance tax liability for unmarried members, unlike a death in service sum.
- Additionally, the relationship between a governing body and its common room is key to any discussion around the TPS. The common room is often a very tightly knit group of individuals, within which a few key individuals will be more vociferous than others. If those individuals feel the governing body has a covert agenda or is not being transparent, the whole process will be undermined.
