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Myth: This is a tax on public servants.
Fact: Public service pension schemes have become increasingly expensive. Until now, the employers (or taxpayers) have met this extra cost.
In 2011 an independent review of public service pensions, recommended increasing contributions to ensure a fairer distribution of costs between members and other taxpayers.
Myth: Public service pension schemes are affordable.
Fact: Affordability in pension schemes is not just about the present but whether there will be enough money in 20 or 30 years time when current members retire.
Myth: My scheme has already been through reform to address sustainability.
Fact: In 2007 the Teachers’ Pension Scheme was reformed to help address increasing costs by raising the normal pension age to 65 and increasing contributions.
The 2011 independent review of public service pensions showed a need for further reform. With this in place, the Government has said that the new scheme designs should mean that no further reform will be necessary for 25 years.
Myth: My pension will be lower.
Fact: If you are less than 10 years from your normal pension age on 1 April 2012, there will be no change to when you can retire or the pension you will receive.
For everybody else, there will be no change to the way your benefits are calculated for any period of employment before 2015.
From 2015 your pension will be worked out using your earnings each year until you retire and not just your salary when you leave or retire.
For most people, the pension they receive will be at least as good as, if not better, than under the current scheme. But your normal pension age will be linked to your State pension age.
Myth: I will lose the pension I have earned so far.
Fact: Benefits you have already earned will be protected. If your scheme is currently a final salary scheme, your benefits earned before 2015 will still be based on your final salary when you leave or retire.
Myth: I will be forced to work longer.
Fact: Only pension earned from 2015 will be linked to your State pension age.
You will be able to retire earlier if you prefer. You will not be forced to work until you are in your mid/late sixties. The longer you continue to work the better off you are likely to be financially. If you retire before your state pension age your pension will be lower.
If you choose to retire before or after your State pension age, your post-2015 pension will be adjusted to fairly reflect the fact it is being paid early or later than expected.
Myth: I will be better off leaving the scheme.
Fact: Most teachers would be financially worse off in the long term if they opted out of the Teachers’ Pension Scheme. Here’s why:
Myth: By contributing the equivalent of 14.1 per cent of your salary, your employer is making a higher contribution than you. You would lose the employer contribution if you opt out. You receive tax relief on your contributions.
Your scheme provides a guaranteed pension, not affected by the ups and downs of the stock-market.
If you opt out, your dependants would not receive a lump sum if you died in service or a pension if you died in retirement before them.
Your National Insurance contributions would increase.
Most people would need to pay about 30 per cent of their salary to buy comparable benefits elsewhere.
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