Your guide to retiring from Teaching in Scotland
When you’re ready to begin taking benefits from your teachers’ pension scheme, you’ll have a number of different retirement options available to you. These options are outlined below.
Retirement at normal pension age
Most teachers begin taking their retirement benefits at normal pension age. For the Scottish Teachers’ Superannuation Scheme, normal pension age is either 60 or 65 depending on when you joined the scheme. If you’re in the Scottish Teachers’ Pension Scheme, your normal pension age is linked to your State Pension age.
Whichever scheme you’re part of, you must leave your teaching post for at least 24 hours before your pension can go into payment. You are able to return to employment after you’ve retired (either as a supply teacher or on a new contract or outside of teaching) but you must terminate your actual employment contract before you can receive retirement benefits from a Scottish Teachers’ pension scheme.
If you remain in your current post after your normal pension age, you’ll be paid benefits when you eventually cease employment and your benefits will be paid from your last day of pensionable service.
If you delay making your claim, your benefits will be backdated to your last day of service or when you reached your normal pension age, whichever is later.
Actuarially Reduced Benefits
If you were in pensionable employment on or after 1st July 2002, you’re able to take your pension benefits early on an actuarially reduced basis between your 55th birthday and your normal pension age.
If you’re in pensionable employment when you apply for actuarially reduced benefits you must obtain the consent of your employer to gain immediate access to retirement benefits. Employers cannot withhold their consent for longer than six months from the date on which you submit your request. Subject to your employer's consent, actuarially reduced pension benefits are paid from the day after your last day of pensionable service.
If you have already left teaching when you apply, benefits will be paid from a date not earlier than six weeks after the date of your application.
If you have benefits in both the STSS and STPS 2015 scheme, you need to take all your benefits at the same time.
Premature retirement is an option if your employer certifies that your employment is being terminated because of redundancy or on the grounds of organisational efficiency. Your employer must also agree to pay a share of the costs.
Providing that you are over the age of 55, and your employer agrees to pay the costs for you to retire on premature grounds, this would allow your pension to be paid in full before the scheme’s normal pension age.
For calculation purposes, your pension benefits would still be reduced as if you were retiring early and SPPA would pay the reduced pension. Your employer would then be responsible for paying the difference in pension to you. This means that you would be in receipt of two pensions, one from the SPPA and one from your employer (or their delegated pension provider) so that you effectively still receive your full pension benefits. The same is applicable for any lump sum, SPPA is responsible for paying the reduced lump sum and your employer (or their delegated pension provider) will be responsible for paying the difference in lump sum. Please note you do not have the option to commute any of the applicable lump sum that the employer is responsible for paying.
Phased retirement allows you to reduce your working commitment, without having a break in employment, while releasing a proportion of your pension. To take advantage of phased retirement, you must:
- have attained the age of 55 (and under 75 for those in the CARE scheme)
- be a member in pensionable employment who has qualified for retirement benefits
- submit an application within 3 months of the salary reduction taking place.
- The reduction in salary must be effective from the chosen phased retirement date.
With phased retirement, you can take up to 75% of your total retirement benefits and you have to have a reduction of at least 20% of your pensionable salary which must occur for a minimum of 12 months.
Your salary reduction can either be due to a reduction in the number of hours worked or because you’ve moved to a post of lesser responsibility. If you work part time and have multiple contracts, the reduction could be achieved by terminating one of your contracts or by reducing them all.
If you’re an STSS scheme member, you can take two phased retirements before finally retiring. STPS 2015 scheme members can have three phases before finally retiring but only two of your phased retirements can be before age 60.
If you have benefits in both STSS and STPS schemes you can choose to take different proportions of your final salary and career average benefits.
When you apply for phased retirement, you may receive up to 75% of your total service, which includes any service accrued since taking your first or second phased retirements. At all times, at least 25% of your benefits must remain in the scheme. With each application for phased retirement there must be a 20% reduction of your pensionable salary prior to your application. The remaining benefits left in the scheme continue to grow as you carry on working and contributing on a reduced salary.
If you apply for phased retirement benefits before your normal pension age, they’ll be actuarially reduced.
If your current employer cannot accommodate, or does not allow your application for phased retirement to go ahead, you may seek new teaching employment elsewhere. Your new employer must agree that the teaching post you’re going to will allow the reduction in salary required for phased retirement.
If your salary increases above the required 20% within 12 months following phased retirement, your application will be void and your pension will be suspended. HMRC may also apply for an unauthorised payment charge which is equal to 40% of the lump sum you received.
The salary that will be used to calculate your final benefits from the scheme will be based on the full time salary.
If you become ill and wish to apply for ill health retirement benefits, only the remaining benefits you have in the scheme, following your phased retirement, would be used in the calculation of your benefits.
If you die whilst in pensionable employment following phased retirement, any death lump sum payable would be:
- STSS members - three times pensionable salary less any lump sums previously paid
- STPS 2015 members - three times your salary rate less lump sum previously paid.
Ill health retirement
There are two types of ill health retirement available to members of the Scottish Teachers’ pension schemes.
Partial Incapacity Benefits can be granted if you’re assessed as being permanently unable to teach but able to undertake other employment. Partial Incapacity Benefits are based on your service accrued to the date of retirement with no enhancement for service you would have completed had you been able to continue working.
Total Incapacity Benefits can be granted if, as well as being permanently unable to teach, you’re assessed as having your ability to carry out any work impaired by more than 90% (and likely permanently to be so in the future). The total amount of enhancement you may receive if you’re awarded Total Incapacity Benefits is half the service you could have completed before your normal pension age.
Applications for ill health retirement should only be submitted after all other avenues such as redeployment have been exhausted. You must provide medical evidence to support your application.
Ill-Health benefits for deferred members are paid at the Partial Incapacity Benefits level and, if approved, are payable from date receipt of application.
It’s recognised that some illnesses are slow to develop or difficult to diagnose and so, as an active member, you’re able to apply for this benefit for up to two years after leaving the scheme.
If you’re not in pensionable employment and you’re not on sick leave or parental leave, although only Partial Incapacity Benefit can be granted and your service will not be enhanced, you must meet the criteria for Total Incapacity Benefit.
Ill-Health benefits cannot be awarded to a teacher who has been barred for misconduct or who is under investigation with a view to barring. Where a teacher under investigation is not subsequently barred, and an application for Ill-Health benefits is accepted, the benefits will be backdated.
If you have not been in service long enough to qualify for ill-Health benefits you can apply for a Short-Service Incapacity Grant. You must have at least one year of pensionable employment to your credit and you must apply within 12 months of leaving reckonable service. In these cases, the incapacity grant is 1/12 of your final pensionable salary for the length of your reckonable service (years and days).
Ill health retirement for members with tapered protection
If you have tapered protection and you apply for ill health retirement before you’re due to join the STPS 2015 Scheme, your application will be considered under the rules of your current section of the STSS. You would not then move to the 2015 Scheme on your transition date until the application process was either complete or your application withdrawn.
Terminal illness benefits
If you become terminally ill, you may be able to take your benefits immediately as a lump sum. If you qualify you’ll receive a payment of five times your annual pension.
You must chose this option when you first apply for ill health retirement as a lump sum can’t be granted once your pension is in payment.
Applying for ill health retirement
If you’re in employment, ask your employer for an ill health application form. If you’ve already left service, contact SPPA.
Benefits in both STSS and STPS 2015
Many people have benefits in both the STSS and the STPS 2015 scheme. This can cause an issue when you reach normal pension age in STSS (60 or 65) but still have some time to go before reaching normal pension age in the STPS 2015 scheme (State Retirement age). If you leave your teaching post in these circumstances, you have a choice. You can either claim your STPS 2015 benefits alongside your STSS benefits or you can leave them in the scheme until you reach your State Pension age. If you take them early, your STPS 2015 benefits will be reduced because they are being paid before your normal retirement age in that arrangement. If you leave them until your State Pension age, they’ll be paid in full. If you have any unclaimed STSS benefits when you claim your STPS 2015 benefits, you must take them too.
- have two years qualifying service
- are aged between 55 and 59 if you were a member prior to 1 April 2007 or are aged between 55 and 64 if you became a member on or after 1 April 2007
- are in pensionable employment
Employers are responsible for two types of compensation: mandatory compensation and discretionary compensation.
Employers are legally obliged to pay mandatory compensation. We’ll pay an actuarially reduced pension and lump sum based on your pensionable service and your employer will pay the difference so that you receive unreduced benefits for your lifetime. Any long-term death benefits paid to your dependants at a later date are paid by us and will not be reduced.
Employers may pay discretionary compensation by way of additional pension and lump sum. Your employer will be responsible for any death benefits paid to your dependants in respect of these discretionary compensation payments. Your employer also has discretion over how much additional pension they may pay you. Premature retirement benefits are not payable if you’re paid an enhanced severance payment under the compensation regulations. They’re also not available to non-permanent members of staff (such as fixed term appointments).
If you’re in multiple part-time employments (including supply teaching) you must ensure that all your employments have ceased before your benefits can be paid.
Additional pension and added years
If you’re buying additional pension by regular deductions from your pay or are purchasing added years, you’ll be credited with a proportion of the benefits purchased to your leaving date. This will be actuarially reduced to take account of the early payment.
If you become re-employed as a teacher (whether pensionable or not) you should check the earning limit set out in your retirement awarding letter. If you think you may exceed the amount shown, contact SPPA immediately.
Lump sum choices
If you were a member of your pension scheme on or after 1 April 2007, you have the option to give up part of your pension for lump sum. In cases of premature retirement, however, the lump sum option is only available on the reduced pension amount payable by SPPA – not on the portion covered by your employer.