Pensions Q&A

BIG changes are happening to the Teachers’ Pension Scheme (TPS) from 1 April.

This stems from the age discrimination that was caused by changes to the public sector pension scheme in 2015. Protections meant older members of the TPS remained in the final salary scheme or delayed joining the career average scheme when younger members transferred into the career average scheme in April 2015. This was found to be unlawful. To rectify the discrimination, eligible members will get a choice between final salary scheme benefits or career average scheme benefits for the period 1 April 2015 to 31 March 2022. Members will be expected to choose at the point of retirement.

Am I affected?

If you were a member of the TPS on 31 March 2012, remained in service on 1 April 2015 and haven’t had a break of more than five years since then, this affects you.

Why are people who joined after 31 March 2012 not affected?

Because legally they would not have had the option of staying in the final salary scheme whatever their age. They would have all been moved into the career average scheme on 1 April 2015.

Will older members who stayed in their final salary schemes until 31 March 2022 get the same choice between final salary and career average?

Yes.

What happens on 1 April 2022?

All members of the TPS will be moved into the career average scheme on 1 April 2022. This includes those older members who previously had full protection.

What happens to the service I’ve built up in the final salary scheme?

This is protected and will be increased in line with consumer price index (CPI) inflation until you take your pension.

What do I need to do if I am affected and haven’t left the TPS?

Nothing. You will be contacted by the TPS and will receive an annual statement showing the comparison between final salary and career average for the period from 1 April 2015 to 31 March 2022. You will only have to make a decision when you take your pension.

Are there any groups who will have to make an immediate decision?

Yes, these are people who have left the TPS between 1 April 2015 and 31 March 2022 who have taken or moved their pension benefits. This includes retirees, people who have transferred their pension out, divorcees, those who have taken ill health retirement and death cases (their representatives in this case). TPS will contact you.

Will teachers have to pay extra because of this decision?

The NEU does not believe teachers will end up paying extra, but this will be determined by the 2020 valuation of the TPS, which is expected to be completed later this year.

The Government intends to pass the cost of fixing the age discrimination on to the TPS so that it is borne by employers/employees. The NEU has pointed out many times the unfairness of making employees potentially pay for their own compensation.

What about the Local Government Pension Scheme (LGPS)?

Compensation for members in the LGPS is different due to the different benefit structure. All LGPS members were moved into a career average scheme in 2014. Older members had the additional protection of an ‘underpin’, guaranteeing them the better of career average or their previous final salary scheme. This ‘underpin’ will be extended to all members for the period 1 April 2014 to 31 March 2022, regardless of age.

Find out more

n Teachers’ Pension Scheme teacherspensions.co.uk n Local Government Pension Scheme lgpsmember.org n NEU pension advice neu.org.uk/pensions n Sign up with TPS MyPensionOnline to keep up to date. You will need a national insurance number and an email address.