The Teachers’ Pension Scheme (TPS) is considered to be one of the best when it comes to this type of scheme. After you retire it means that you will be receive a lump sum of money along with a regular income. One of the really attractive elements of TPS is that it can also be benefit your dependents in the event of your demise. This scheme is set up on behalf of the Department for Education and it is administered by Teachers’ Pensions.
How Does the Teachers’ Pension Scheme Work?
The TPS is a type of pension that is referred to as a final salary scheme. It is guaranteed to pay benefits as least as high as the state pension; the really good news is that you also get to collect your basic state pension along with your TPS. This pension scheme is an opt-out rather than an opt-in scheme; this means that if you work as a teacher you will be automatically part of TPS unless you decide that you don’t want to be.
The money for TPS is automatically deducted from wages. This will be 6.4% of your gross salary; the same applies for both full-time and part-time workers. On top of your contribution the employer will add a further 14.1%; this means that overall 20.5% of the amount of your salary will be paid into the fund each month. It is sometimes possible to buy additional credit in the scheme and to transfer credit into TPS from other schemes.
The benefits of the Teachers’ Pension Scheme includes –
• It may be possible to get your pension early if you become incapable of working due to illness.
• Your dependents will benefit from your TPS should you die. If you were to pass away before reaching retirement age your dependents would be given a lump sum of money.
• The pension is index-linked and this will insure that you don’t end up losing out because of inflation.
• If you joined the scheme after 2007 you will get part of your pension as a lump sum. I you joined the scheme before 2007 you can choose this option.
• Even if you only work part-time you will still be a member of this scheme.
• A large proportion of the contribution to TPS will come from your employer.
• If you already have credit from some other pension scheme you may be able to transfer it to TPS.
• If you want to it will be possible to buy additional pension credit.
TPS and Academies
Since the 2010 Academies Act there have been many schools expressing interest in changing to this type of institution. This means that in the future there is likely to be a lot more teachers working for an Academy and of course they will be interested to know about what this means for the TPS.
All Academies are expected to ensure that teachers are offered the TPS scheme. It is the responsibility of each Academy to work with Teachers’ Pensions to ensure that the transfer from local authority to Academy proceeds smoothly in regards to contributions to the scheme. When an Academy is created the school will be expected to withdraw the teachers from TPS and then use the TR6 template to restore them back to TPS as teachers working for an Academy. It should be noted that some teachers may have opted out of the scheme previously, but will now be automatically added again unless they express the wish for this not to happen.
Some Final Thoughts on TPS
TPS is considered a great way to prepare for your retirement; there are many who would consider it to be one of the great benefits of being a teacher. When the day comes to stop teaching and have more time for our interests we want to have the money to enjoy life. With TPS the future is secure financially and it should mean that we can live comfortably for what some consider the best years of their life. Depending on the level of contributions made, the TPS also provides a lot of reassurance about the future; if you become too ill to work then you will have money to fall back on. If we should die then at least you know that your dependents should avoid financial hardship.