Teachers: Pensions

Education written question – answered on 4th July 2012.

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Photo of Chris Skidmore Chris Skidmore Conservative, Kingswood

To ask the Secretary of State for Education what the average lump sum payment made to retiring teachers is for teachers who have been employed full-time for 30 years or more.

Photo of Nick Gibb Nick Gibb Minister of State (Education)

A person who joined the Teachers' Pension Scheme (TPS) before 2007 builds a pension of 1/80 of their salary for each year of service and 3/80s as a lump sum. Therefore a typical classroom teacher, who has 30 years service and a final salary of £36,800, will receive an average pension of £13,800 and an automatic lump sum of £41,400.

A person who joined the TPS after 2007 builds a pension of 1/60 of their salary for each year of service but do not build an automatic lump sum. They do have the option though to give up part of their pension in exchange for a lump sum. If they choose to do so they exchange up to 25% of their pension value and receive a lump sum of £12 for every £1 of pension.

In this case a typical classroom teacher, who has 30 years service and a final salary of £36,800, will receive an average pension of £18,400. If this teacher chooses to give up the maximum amount in exchange for a lump sum they would receive a lump sum of £78,857 and a pension of £11,829.

On average teachers retire before they have 30 years of service. In the year ending 31 March 2012, 55% of teachers retiring at the normal pension age retired with less than 30 years service. The average lump sum paid out was £37,000.

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