PHASED RETIREMENT PROCEDURE FOR SCHOOLS
(TEACHERS’ PENSION SCHEME)
1.1 The introduction of phased retirement arrangements alongside other changes to the
Teachers’ Pension Scheme in January 2007 allows staff who are members of the
Scheme to continue working while drawing some of their accrued pension benefits,
both annual pension and lump sum (where applicable).
1.2 The member’s pensionable salary must reduce by at least 25% for a minimum of 12
months following the date of retirement. This could, for example, be because they
have taken up a post of lesser responsibility or because their employer agrees to a
reduction in working hours.
1.3 The guidance and procedure described below has been developed in order to
promote consistency in administration of the provisions, in accordance with the
scheme, and balancing the interests of employee and employer.
2 Phased Retirement Provisions
2.1 Qualifying Criteria
Phased retirement allows for immediate access to lump sum and annual pension
benefits whilst remaining at work (employment is continuous, and no break in service
is required before pension benefit can be accessed). In order to access Phased
Retirement, an employee must be aged 55 years or over. The employee will require
the approval of the governing body/County Council as appropriate. As a condition
they must transfer to a post at a lower grade, and/or reduce their contractual hours.
The reduction in salary, which must last for at least 12 months, could be as a result of
moving to part time work or taking up a post with less responsibility.
2.2 Effect of Early introduction of Pension Benefits
2.2.1 Access to lump sum and annual pension benefits will normally be paid without any
enhancement, and on the basis of the employee’s own service. Early introduction of
pension benefits, i.e. before normal retirement age 60 (65 for new entrants to TP as
of 1 January 2007), will be subject to an actuarial reduction (i.e. a financial reduction)
in the amount of pension and lump sum payable, based upon age and length of
pensionable service at the date of retirement. This reflects the fact that the pension is
being paid earlier than would have otherwise have been the case.
2.2.2 Details of the financial (actuarially calculated) reduction that will apply will be
provided by Teachers’ Pensions. All requests must be made to the Headteacher (or
in the case of non-school employees the Head of Human Resources on behalf of the
Director for Children’s Services) using the Phased Retirement Teachers’ Pension
Scheme Access Request Form.
2.3 Thresholds for Phased Retirement
2.3.1 If permission is given for an employee choosing to take phased retirement i.e. to
access their benefits but continue working in some capacity, there is no cap on
overall earnings. It is therefore acceptable for salary and annual pension to equate to
more than the employee’s original salary prior to accessing pension benefit.
2.3.2 The member can take any proportion up to 75% and can have two phased
retirements before final retirement. There has to be a 25% reduction in pensionable
salary at each phased retirement and the benefits taken cannot exceed 75% of the
benefits that are available at each phased retirement.
Retirement Guidance December 2008 Issue Page 1 of 3
2.3.3 If the member’s salary exceeds the 25% reduction in the first 12 months after phased
retirement, their application will be void and future pension payments will be
suspended. There may also be an unauthorised payment charge from HM Revenue
and Customs of 40% of any lump sum received.
2.3.4 Any remaining service (a minimum of 25%) that is not used in the phased retirement
calculations will be aggregated together with any subsequent service accrued to be
used in any future benefit calculations.
2.4 Re-employment following Retirement
2.4.1 In situations where the employee is retiring simply in the normal course of events,
he/she may seek further employment with the County Council, on a competitive
basis, provided there has been at least one days break in service. In such situations
the pension may be abated when total earnings exceed the terminal rate of pay less
2.4.2 The continuous service date for annual leave and other purposes will be with effect
from the date of the new contract. Pension contributions can be made in respect of
the new employment up to 2 days before the age of 75.
3 Procedural Guidance for Phased Retirement
3.1 Detailed procedural guidance is available in Sections 2e and 2f of the Redundancies,
requests for premature and flexible/phased retirements in schools (procedural
guidance for headteachers and governing bodies). A summary is given below.
4 Phased Retirement with Actuarial Reduction in Benefits and/or at no cost to
4.1 Phased retirement requests, with access to early pension benefits, where there is no
cost to the County Council, will be subject to the approval of the governing body (or
in the case of non-school members of the Teachers’ Pension Scheme, the Head of
Human Resources on behalf of the Director for Children’s Services or Director for
Adult & Community Services).
4.2 All requests for phased retirement should be made using the Phased Retirement
Teachers’ Pension Scheme Access Request Form. To ensure consistency,
applications will be received and coordinated through the appropriate HR Employee
4.3 If Phased Retirement is agreed, and the employee subsequently resigns, but is re-
employed at a later date, with the same employer, the abatement rules do not apply.
5 Phased Retirement where there is a cost to the County Council
5.1 Where a cost is involved, and a school is seeking County Council funding, cases will
be submitted for consideration to the Head of Human Resources on behalf of the
Director for Children’s Services where it is in the interests of the County Council for
the request to be agreed such as to facilitate organisational change, to help address
a budget deficit or from a County Council initiative affecting schools.
5.2 Where a cost is involved and the reasons fall outside those in 5.1, the school will be
expected to fund the costs from their budget. If, however, the governors wish the
County Council to fund in these circumstances, the request will need to be agreed by
the Personnel Appeals Committee.
5.3 Any additional cost to the County Council arising from situations described in 4.1
would be met from non-delegated schools’ funds.
Retirement Guidance December 2008 Issue Page 2 of 3
6.1 This guidance brings together a number of complicated provisions concerning
phased retirement and application of compensation payments. Inevitably, therefore,
much detail has had to be omitted whilst seeking to provide a summary which is
helpful in understanding the rules generally, and the County Council policy.
6.2 In all cases, care must be taken to ensure that the circumstances surrounding each
individual situation are carefully considered and that the Head of Human Resources
& Exchequer Services is consulted at an early stage.
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