SWMBO's a retired teacher and started receiving her occupational pension early this year from the teacher's pension scheme.
She's just received another lump sum and the explanation: You are now entitled to an increase in your lump sum as a result of the provisions of the pensions increase acts.
I can't find any explanation for this and believing there's a few retired teachers here, wondered if any of them can. Perhaps they can point me to the relevant documentation.
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My wife (Police Officer) came home and mentioned this - I believe it's a HMRC decision I'll find the link. It effects Police Officers as well.
www.polfed.org/mediacenter/C4ED983ED5504B9FB8F24039943C528F.asp
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I think the qualifying date is from 20.4.2011 onwards
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>>..from the teacher's pension scheme.>>
Perhaps it's because there's only one teacher in the scheme? ..:-)
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BBD's gone very quiet since he learned PU's wife wears a uniform. ;>)
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>>Perhaps it's because there's only one teacher in the scheme? ..:-)
SWMBO tried to get me to read Lynne Truss.
Edit. spelling!
Last edited by: bathtub tom {p} on Fri 13 May 11 at 21:02
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>> I can't find any explanation for this ...........
I personally wouldn't be bothered about the reason. I'd just be pleased to accept the increase.
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>> I can't find any explanation for this
Basicallly,when you take a lump sum payment out of your pension pot (commutation) you receive a lower annual pension afterwards, as you've taken money out of the pot in cash.
To decide how much cash you can have, the difference in the higher pension (the one if you didn't take the commutation) and the residual pension (the lower one you get if you do) is multiplied by an 'accelerator'. The accelerator is the average number of years you are expected to live.
As people are living longer, that figure has just been revised...again. The last one was in 2006.
The younger you retire, the more you get as cash, because your accelerator figure is higher...because you've got more years to go to get to that average year figure.
The above is certainly relevant for state funded pensions that are not invested i.e. paid for by the State as and when they're needed, rather than sat earning money somewhere. I have no idea what private pension schemes do.
P.S. I'm not in any way a financial advisor, I have just looked very closely at my own circumstances.
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Thanks for that Westpig, (I think) I understand it.
The teachers' pension scheme seems reluctant or unwilling to reply to questions.
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It's nothing to do with people living longer. The Pensions Increase Act is just the official name for the process known to most people as index-linking. If the cost of living goes up, public sector pensions go up too. If you received a lump sum at a point in the year before the PIA had made the adjustment, you would be due a bit more.
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>>If you received a lump sum at a point in the year before the PIA had made the adjustment
That makes even more sense.
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>> Basicallly,when you take a lump sum payment out of your pension pot (commutation) you receive
>> a lower annual pension afterwards, as you've taken money out of the pot in cash.
>>
>> To decide how much cash you can have, the difference in the higher pension (the
>> one if you didn't take the commutation) and the residual pension (the lower one you
>> get if you do) is multiplied by an 'accelerator'. The accelerator is the average number
>> of years you are expected to live.
The rules must have changed. At the time I started drawing my occupational pension, HMRC (or Inland Revenue as it was then) allowed a lump sum of up to 25% of final salary. Final salary was as defined by the pension scheme. Our pension scheme calculated the pension from a combination of what was left in the pension pot and the number of years the member had been in the scheme. The only accelerator we had was in our car!
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Teacher's pension lump sum increase - R.P.
