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Premature retirement

Hi Has anyone had to complete a premature retirement estimate for Teaching Staff? Teachers pensions can only provide an estimate for six months in advance. The Headteacher would like to know for August 2022. As retirement was intended for 2023. The employee is happy to take premature retirement. However the employee and school would need to know how much the school would need to pay. Any help would be greatly appreciated as this affects current staff planning for the new academic year. Thank you.
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  • A good firm of actuaries familiar with the teachers scheme should be able to help. My guess is that in today's financial climate it will be hellishly expensive since investment returns and interest rates are low . As an indication, buying an annuity or an increase to a pension promise of £1,000 currently will cost around £31,000......
  • Hi Danielle

    The teacher involved might be encouraged further to seek their own advice and guidance eg from their union, who should be expert re all the various provisions and able to discuss with your head teacher etc.

    I’m no authority at all on Teachers Pensions specifically but in general think it’s unusual for any employers in a defined benefit scheme except in cases of permanent incapacity to pay up pension entitlements all the way up to date of normal retirement. It’s more usual to permit early retirement with pension worked out as at the date of actual early retirement. It will of course cost the pension scheme more to start paying the pension prematurely and this used to average about 5% reduction in pension payable for life for every complete year of early payment. Normally it would be the pensioner themselves who’d be subject to this reduction but maybe Teachers Pensions allow the employer to offset it with a lump sum payment but as Ray says it’s likely to be a big sum to pay.

    PS

    what little I do know about Teachers Pensions is that they once were most excellently run but are  now run by private sector subcontractors and any interactions I’ve had with them since then have been dire indeed.