Understanding your TPS statement

Why your pension statement matters

When it comes to planning for retirement, your Teachers’ Pension Scheme (TPS) statement is one of the most important documents you’ll need.

Not only does your statement outline what your pension is worth, it also shows your lump sum entitlement. 

We know that sometimes these statements can feel confusing, especially when it comes to understanding the different parts and when you can access your pension.

Read on to find out what means what when it comes to understanding your statement, and when it may be helpful to seek personalised guidance.

What does your TPS statement show?

Along with an overview of your pension benefits, your statement will also provide a detailed breakdown of your scheme and how your benefits are calculated. Having this information helps you to understand what you’ll have available to you in retirement.

The key areas to be aware of are:

Your total annual pension amount

Along with the total value of your pension, this section of your statement provides a breakdown of the parts of the scheme you’re in and how much you’ve built up in them.

There are generally two parts of the scheme that members can be in – the career average scheme (or CARE scheme) and the final salary scheme.

Our guide to the Teachers’ Pension Scheme provides a detailed breakdown of how your benefits are calculated for each part.

If you joined the scheme before 1^st April 2015, you’ll likely have benefits built up in both the career average scheme and one of the final salary schemes. Your Normal Pension Age (NPA) will be 60 or 65 years old on the final salary scheme but state pension age for the CARE scheme, as advised on your benefit statement. If you decide to take early retirement, you will have to take your benefits from both parts.

If you joined the TPS after March 2012, you will still have benefits in both the final salary and CARE scheme. Unlike members who joined before this time, you will not be affected by the McCloud judgement. 

Your service history

This section shows the years of service you’ve built up in the scheme. The information is then used to calculate your benefits.

If you’ve moved jobs or schools, it’s worth checking that nothing is missing from your history. If you identify any gaps, you should contact the school you were working at during that time to update the record. The TPS will not be able to do this without confirmation from the school.

Your salary of reference

Your salary of reference (SoR) is one of the areas used to work out your benefits. It’s the highest annual salary used in the calculation of your average salary and is usually included in your best three consecutive years of salary (inflation adjusted) from the past ten years.

If you work beyond your NPA, your SoR will be used to calculate what you can earn before triggering the abatement rule.

Your lump sum

If you’re part of the 1/80^th final salary scheme, you will usually receive an automatic lump sum at retirement. This should be shown on the first page of your statement. You can also choose to convert part of your pension to increase your pension lump sum.

If you’re part of the 1/60^th final salary scheme, you will not receive an automatic lump sum, however, you can apply to convert part of your pension to a lump sum.

If you only have benefits built up in the CARE part of the scheme, you will not receive an automatic lump sum. You can, however, apply to convert part of your pension to a lump sum.

What doesn’t your TPS statement show?

Your TPS statement is designed to show the benefits you’ve accrued so far. However, it won’t be able to give you the full picture. That’s because your retirement benefits will likely be made up of more than just your teachers’ pension.

If you’ve had another career prior to working as a teacher, you may have other pensions you can draw on. Your TPS statement also won’t include any details linked to your state pension.

How can personalised financial advice help?

Personalised financial advice can help to get a clearer picture of what you’re likely to receive in retirement which is essential for retirement planning.

Areas like your savings, your state pension and any other pensions you may have had prior to teaching, will all go towards creating the lifestyle you can expect to have after the classroom.

If you’re looking for tailored financial advice to help you to plan towards your retirement, it may be worth speaking to a Specialist Financial Adviser from Wesleyan Financial Services. Charges may apply.