Caculation of benefits questions
Questions on calculation of benefits
1. When do I qualify for benefits?
2. How are my pension and lump sum calculated?
7. How does part-time employment count towards Pensionable Service?
8. Am I entitled to benefits should I retire early due to ill-health?
9. If I am prematurely retired by my employer am I entitled to early payment of benefits?
10. How do I apply for Pension and Lump Sum?
1. When do I qualify for benefits?
Normally at age 60, providing you have retired from service. If you remain in service after age 60, benefits are payable when you eventually retire from pensionable service.
A woman teacher who first entered reckonable service before 1 April 1972 and has completed 30 years’ reckonable service, which may include service transferred in from another scheme, may retire on or after attaining the age of 55.
2. How are my pension and lump sum calculated?
Your pension and lump sum calculations are based on the following formulae:-
Pension
1/80th x Average Salary x Pensionable Service
For example:
Average Salary = £16,000: Service = 40 years
Pension = 1/80th x £16,000 x 40 = £8,000 per annum
Lump sum
3/80ths x Average Salary x Pensionable Service
For example:
3/80 x £16,000 x 40 = £24,000
3. What is average salary?
Average salary (also known as Pensionable Pay) is the earnings of the 365 consecutive (but not necessarily continuous) days of pensionable service, during the final 1,095 days of pensionable service, which are most advantageous to you.
4. What if I work part-time?
When calculating the average salary for a period of part-time employment, that employment (for average salary purposes only) is deemed to be full-time. If you are job-sharing, your salary for the last year of employment is deemed to have been full-time. However, you are credited only with the service actually worked.
5. If I am contributing to the Scheme from a full-time employment and a part-time employment, are my earnings from these employments combined when calculating average salary?
No. In these circumstances electing that your part-time employment be pensionable could reduce your pension benefits. This could happen if the part-time employment is paid on a lower salary scale.
6. If, during the same period(s), I have been concurrently contributing to the Scheme from several part-time employments, will my earnings from all these employments be combined when calculating my Average Annual Salary?
Yes. In those circumstances your average salary might be calculated over less than 365 calendar days. The Average Salary is the earnings of 365 pensionable days, not calendar days
7. How does part-time employment count towards Pensionable Service?
The amount of earnings of a period of part-time employment is divided by the annual salary rate prevailing during that period and the result multiplied by 365. If the annual salary rate is £20,000, you work part-time 2 days per week from October to February and earn £2,000 you would generate 36.5 days of pensionable service.
All service is counted in years and days and benefits are calculated on your total pensionable service at retirement.
NOTE: Pensionable Service is restricted to a maximum of 40 years at age 60
8. Am I entitled to benefits should I retire early due to ill-health?
If you are aged under 60 and you believe that you are no longer able to teach due to ill-health you may apply, through your employer, for ill-health retirement benefits.
9. If I am prematurely retired by my employer am I entitled to early payment of benefits?
If you are aged 50 or over and your employment is terminated by your employer on grounds of redundancy or in the interest of the efficient discharge of the employer’s function then you may be entitled to premature retirement benefits.
These benefits are calculated in the same way as the normal retirement pension and lump sum allowance. However, your benefits may be supplemented at the discretion of your employer by awarding compensation (additional years) which vary according to your years of pensionable service.
10. How do I apply for Pension and Lump Sum?
Application should be made on Form TP4 (obtainable from the Department) at least 4 months before the date you intend to retire.
