What happens to your pension if you leave or opt out?
If you’re considering leaving your Scottish Teachers' pension scheme or opting out, your options will depend on your circumstances. Just choose from the options below that best describe your circumstances to find out more about the choices you can make.
Your teacher’s pension is a valuable benefit
Before leaving the Scottish Teachers’ Superannuation Scheme you should carefully consider all your options, comparing any costs and the value of the many benefits provided by the scheme. It’s also worth taking independent financial advice when you’re weighing up your options. Remember, if you remain in the scheme you’ll continue to benefit from:
- a pension payable for life upon retirement (after two years’ qualifying service)
- the option to take part of your pension as a tax-free lump sum when you retire
- tax relief on any contributions you pay into the scheme
- a range of benefits for your dependants if you die
- the option to nominate an individual, or individuals, to receive a lump sum payable in the event of your death
- the option to increase your benefits by paying extra contributions which can be deducted along with your regular contributions or paid as lump sums
- the option to apply for ill-health retirement if you’re unable to work due to ill-health.
Leaving teaching in Scotland or transferring out of the scheme
If you decide to leave your teaching post in Scotland, we’ll be notified by your employer. At this point, there are a few options available to you concerning your accumulated pension rights. Here are your options:
Transfer your benefits: You can transfer your benefits out of this scheme to another teachers’ pension scheme (for example one in England & Wales or Northern Ireland) or to a registered occupational pension scheme with defined benefits, such as a Local Government pension scheme. Note that you should contact your new pension provider as soon as possible after joining their scheme, as they may have time limits on receiving a transfer.
Refund of contributions: If you have less than two years’ qualifying service, you may be eligible to apply for a refund of scheme contributions, or, if you intend to return to teaching employment in Scotland within five years, you may choose to preserve your accumulated pension benefits and link your different periods of service.
Preserve your pension: If you have more than two years’ qualifying service, your accumulated pension benefits will be preserved and will be payable at the scheme’s normal pension age. These benefits will be re-valued annually in line with increases in the Consumer Price Index.
Re-joining the scheme: If you return to teaching employment in Scotland, you can re-join the scheme. Depending on the length of your break, your pensionable service may be linked for future benefit purposes.
Qualifying service is the calendar period that you work which counts towards qualifying for pension benefits. For the Scottish Teachers’ Pension Scheme, you need to have two years’ qualifying service before you’re eligible to receive a benefit from the scheme.
Staying in teaching employment in Scotland but opting out of the pension scheme
Although membership of the teachers’ pension scheme is automatic, it isn’t compulsory. You can choose to opt out at any time after joining by completing an Opt Out form.
Opting out: If you opt out of the scheme, your employer will stop deducting pension contributions from your salary and advise SPPA that you are no longer an active member of the scheme. Please note that if you do leave the scheme you won’t accumulate any pension benefits during any period where you’re not an actively contributing member. You can re-join the scheme at any time by contacting your employer.
Auto-enrolment: If you opt out of the scheme, and you’re still employed as a teacher in Scotland, your employer will automatically enrol you back into the scheme every three years. You’ll also be automatically enrolled in the scheme if you start a new contract. You can, of course, opt out again, if you wish, after auto-enrolment.
Refund of contributions: If you have less than two years’ qualifying service* in the scheme when you opt out, you can apply for a refund of your contributions by indicating your preference for a refund on the Opt Out form. Tax will be deducted from the refund before it’s paid to you.
* The calendar period that you work which counts towards qualifying for pension benefits.
Fully protected members of the Scottish Teachers' Superannuation Scheme: If your break of contributions exceeds five years, you’ll only be eligible to join the Career Average Revalued Earnings (CARE) section of the scheme if you opt back in.
Re-employed STSS pensioners
If you already receive a pension from the Scottish Teachers’ scheme and you’ve returned to teaching employment, your employer will automatically enrol you into the pension scheme. Due to HMRC regulations, SPPA isn’t able to refund any contributions you make during periods where you’ve returned to work. However, the following options are available to you.
Opting out within three months: If you opt out of the scheme within three months of your re-employment, your contributions will be refunded by your employer.
Re-employed for more than three months: If you’re enrolled in the scheme for more than three months but less than one calendar year, your contributions and any interest will generate a Short Service Annuity in addition to your existing pension, payable from your State Pension Age.