The Teachers’ Pensions etc. (Reform Amendments) Regulations 2006

Retirement benefits - pension and lump sum

29.  For regulations E5 and E6 substitute—

“Eligibility for payment of phased retirement benefits

E4A.— (1) In these Regulations “phased retirement benefits” means retirement benefits to which a person may be eligible under this regulation.

(2) A person in pensionable employment who is qualified for retirement benefits is eligible to receive a part of his retirement benefits before he becomes entitled to payment of them if—

(a) he has attained the age of 55, and

(b) his employer at the time of an election pursuant to paragraph (4) has certified that he will continue in pensionable employment such as to result in a reduction of contributable salary of at least 25%, as compared with the average annual rate of his contributable salary for the six months prior to the end of his previous employment, from the first day of pensionable employment at the reduced contributable salary.

(3) A person who is qualified for retirement benefits is also eligible to receive part of his retirement benefits before he becomes entitled to payment of them if—

(a) he has attained the age of 55,

(b) after attaining that age he ceases to be in pensionable employment,

(c) within six months of the last day of that employment has—

(i) secured further pensionable employment, or

(ii) secured further employment in a school, college or university otherwise than as a teacher, and

(d) his employer in the further employment has certified that there has been a reduction in his contributable salary of at least 25%, as compared with the average annual rate of his contributable salary for the six months prior to the end of his previous employment, from the first day of further employment at the reduced contributable salary.

(4) Eligibility to phased retirement benefits pursuant to this regulation is conditional upon—

(a) the person making a maximum of two elections for such benefits, and each election is accompanied by certification as prescribed in paragraph (2)(b) or (3)(d) and

(b) the election being made within three months of starting employment as referred to in paragraph (2)(b) or securing further employment as referred to in paragraph (3).

(5) Subject to paragraph (7) the election shall specify a percentage (“the election percentage”), not exceeding 75% by reference to which retirement benefits are to be calculated in accordance with paragraphs (8) to (10).

(6) Where in the 12 month period following the reduction of contributable salary, a person receives an increase in excess of the standard increase as defined in regulation E31(13)(d) in remuneration such as to give that person 75% or more of his salary prior to that reduction, then any election made pursuant to this regulation ceases to have effect.

(7) Where the person is a person with mixed service the election may specify that it only applies to the part of the person’s effective reckonable service which was before the start of the new employment after the relevant break of service or only applies to the part of the person’s effective service which was after the start of the new employment after the relevant break of service.

(8) Where the election is the first or only election the phased retirement benefits are calculated on the basis specified in regulation E5(2) and (where applicable) E6(2) but—

(a) the person’s average salary is calculated as if his average salary service ended immediately at the date of the change in pensionable employment, and

(b) the person’s effective reckonable service is the election percentage of his reckonable service up to the date of the change in pensionable employment.

(9) Where the election is the second election, phased retirement benefits are calculated on the basis specified in regulation E5(2) and (where applicable) E6(2) but—

(a) the person’s average salary is calculated in the manner specified in paragraph (8), and

(b) the person’s effective reckonable service is—

(i) the election percentage of the person’s reckonable service up to the date of the second change in pensionable employment, less

(ii) the amount of reckonable service calculated in accordance with paragraph (8)(b).

(10) Phased retirement benefits calculated in accordance with paragraph (8) or (9) are adjusted by multiplication by the appropriate factor, and (in the case of a retirement pension) the adjustment is effected in the same way as is specified in regulation E5(7).

(11) A person who has elected to pay additional contributions under regulation C3C and who has elected for phased retirement benefits, may elect also for payment in full of those additional benefits to which he is entitled under that regulation, multiplied by the appropriate factor in the same way as is specified in regulation E5A(6).

(12) In calculating the factor by which additional benefits referred to in paragraph (11) are to be multiplied and divided pursuant to regulation E5A(3) and (4)—

(a) RI is the retail prices index for the second month before the month in which the change in pensionable employment occurred, and

(b) the definition of X has effect as if for “the date on which the person became entitled to payment of retirement benefits” there were substituted “the date of the change in pensionable employment”.

(13) Where the employer referred to in paragraph (3)(d) is unable to certify as prescribed in that paragraph because the previous employer has not provided him with the necessary information, the Secretary of State may determine nevertheless whether the person shall be entitled to phased retirement benefits.

(14) In this regulation “change in pensionable employment”, where the person falls within paragraph (2), is the day before the date on which contributable salary is reduced, and where the person falls within paragraph (3) is the date of leaving previous pensionable employment.

Amount of retirement pension

E5.— (1) The annual rate of a person’s retirement pension is the rate specified in paragraph (2) together with the rate specified in regulation E5A where that regulation applies (but nothing in this regulation or regulation E5A shall prevent different parts of a person’s retirement pension being paid at different times if the person becomes entitled to the parts at different times).

(2) Subject to paragraphs (4) and (6) to (14) and regulations E6A to E10, the rate is —

(a) in the case of a pre-2007 entrant, 1/80th of the person’s average salary multiplied by his effective reckonable service,

(b) in the case of a 2007 or later entrant, 1/60th of the person’s average salary multiplied by his effective reckonable service, and

(c) in the case of a person with mixed service the aggregate of—

(i) 1/80th of the person’s average salary multiplied by that part of his effective reckonable service which was before the post-break employment start, and

(ii) 1/60th of the person’s average salary multiplied by that part of his effective reckonable service which was after the post-break employment start.

(3) For the purposes of paragraph (2) reckonable service is to be expressed in years and fractions of a year.

(4) If—

(a) the person is entitled to count a period as reckonable service by virtue of regulation D3 (past period for which additional contributions have been paid), and

(b) by reason of regulation E32(3) part of that period does not count in calculating his retirement lump sum,

the annual rate calculated in accordance with paragraph (2) is, in respect of each year comprised in that part, increased by 1/350th of his average salary.

(5) In paragraphs (6) to (10) “the basic rate” is the rate calculated in accordance with paragraphs (2) and (4) and, where appropriate, regulation E7 or E9 (but disregarding the effect of regulation E10).

(6) Subject to paragraphs (7) to (10), where—

(a) a person who has become entitled to payment of retirement benefits by virtue of regulation E4(5) has ceased to be in pensionable employment or excluded employment on or after 1st September 1997, or

(b) a person has become entitled to payment of retirement benefits by virtue of regulation E4(5A),

the basic rate is adjusted as specified in paragraph (7).

(7) The adjustments are—

(a) in the case of a pre-2007 entrant, multiplication of the annual rate of such pension by the appropriate factor for a person with a normal pension age of 60,

(b) in the case of a 2007 or later entrant, multiplication of the annual rate of such pension by the appropriate factor for a person with a normal pension age of 65,

(c) in the case of a person with mixed service who has not attained the age of 60, multiplication of that part of the annual rate of such pension referred to in paragraph (2)(c)(i) by the appropriate factor for a person with a normal pension age of 60 and multiplication of that part of the annual rate of such pension referred to in paragraph (2)(c)(ii) by the appropriate factor for a person with a normal pension age of 65, and

(d) in the case of a person with mixed service who has attained the age of 60, multiplication of that part of the annual rate of such pension as is mentioned in paragraph (2)(c)(ii) by the appropriate factor for a person with a normal pension age of 65.

(8) Paragraph (6) does not apply where, in the case of a person who falls within paragraph (4)(a), notice to terminate the person’s employment was given, or his resignation tendered, on or before 22nd October 1996.

(9) Where the person falls within paragraph (6)(a) and—

(a) the person has a guaranteed minimum in relation to employment up to 6th April 1997, and

(b) A exceeds B, where

A is the annual equivalent of his guaranteed minimum pension together with that of any equivalent pension benefits, and

• B is the basic rate, where applicable, adjusted in accordance with paragraphs (6) and (7)

• the annual rate of his retirement pension is A.

(10) Where a 2007 or later entrant or a person with mixed service has effective reckonable service which has occurred after he attained the age of 65 the basic rate is adjusted as specified in paragraph (11).

(11) The adjustments are—

(a) in the case of a 2007 or later entrant, multiplication of the annual rate of that part of his retirement pension which relates to effective reckonable service before the person attained the age of 65, by the relevant enhancement factor, and

(b) in the case of a person with mixed service, multiplication of that part of his retirement pension which relates to the part of his effective reckonable service before the person attained the age of 65 but after the post-break employment start, by the relevant enhancement factor.

(12) In paragraph (11) “the relevant enhancement factor” means a factor (related to the length of the period which has elapsed between the person’s 65th birthday and the date (after his 65th birthday) on which he became entitled to retirement benefits) determined from time to time for the purpose of this regulation by the Secretary of State after taking advice from the Government Actuary.

(13) If a contributions equivalent premium has been paid in respect of the person and has not been refunded (and his entitlement to a guaranteed minimum pension is therefore extinguished) the annual rate of his retirement pension is reduced by the annual equivalent of the guaranteed minimum pension to which he would otherwise have been entitled.

(14) Where a person has received phased retirement benefits, the person’s effective reckonable service is reduced by the amount of reckonable service (determined under regulation E4A(8) and, where, applicable, regulation E4A(9)) taken into account in calculating phased retirement benefits.

Retirement pension when election has been made under regulation C3C

E5A.— (1) This regulation applies where one or more elections under regulation C3C have been accepted by the Secretary of State and have not ceased to have effect.

(2) Where this regulation applies the annual rate of a person’s retirement pension is (in addition to the annual rate specified in regulation E5(2)) the aggregate of the annual rates with which the person has been credited pursuant to each election and Schedule 2A, multiplied by the factor specified in paragraph (3) and divided by the factor (if it is greater than one) specified in paragraph (4).

(3) The factor in this paragraph is RI/RE where—

• RI is the retail prices index for second month before the month in which the person becomes entitled to the part of his retirement pension referred to in this regulation, and

• RE is the retail prices index for the month which includes the start date, as defined in paragraph 1 of Schedule 2A, for the election in question.

(4) The factor in this paragraph is X/Y where—

• X is the amount which would have been the annual rate of the person’s retirement pension calculated in accordance with the combined effect of paragraphs (2) and (3) (as if in paragraph (2) the words “and divided by the factor (if it is greater than one) specified in paragraph (4)” had been omitted) and any increases effected by the 1971 Act up to the date on which the person became entitled to payment of retirement benefits, and

• Y is the amount which would have been the annual rate of the person’s retirement pension calculated in accordance with paragraphs (2) and (3) if in paragraph (2) the words “and divided by the factor (if it is greater than one) specified in paragraph (4)” had been omitted and if the 1971 Act did not apply.

(5) Where regulation E5(6) applies, the annual rate of the person’s retirement pension calculated in accordance with paragraphs (2) and (3) shall be adjusted as specified in paragraph (6).

(6) The adjustments are—

(a) in the case of a pre-2007 entrant, multiplication of the annual rate of such pension by the appropriate factor for a person with a normal pension age of 60,

(b) in the case of a 2007 or later entrant, multiplication of the annual rate of such pension by the appropriate factor for a person with a normal pension age of 65, and

(c) in the case of a person with mixed service who falls within regulation E4(2B) who has not attained the age of 60, multiplication of the annual rate of such pension by the appropriate factor for a person with a normal pension age of 60, and

(d) in the case of a person with mixed service other than a person such as is referred to in regulation E4(2B), multiplication of the annual rate of such pension by the appropriate factor for a person with a normal pension age of 65.

(7) In this regulation “the 1971 Act” means the Pensions (Increase) Act 1971(1).

Amount of retirement lump sum

E6.— (1) This regulation applies to a pre-2007 entrant and a person with mixed service.

(2) Subject to paragraphs (4), (5), (7) and (8) and regulations E7 and E8, the amount of retirement lump sum for a person to whom this regulation applies is Ax(B+C) where—

• A is 3/80ths of the person’s average salary,

• B is, in the case of a pre-2007 entrant, his effective reckonable service or, in the case of a person with a mixed service, that part of his effective reckonable service which was before the post-break employment start (except, in either case, any falling within C), and

• C is any period which he is entitled to count as reckonable service by virtue of regulation D3 (past period for which additional contributions have been paid).

(3) For the purposes of paragraph (2), reckonable service is to be expressed in years and fractions of a year.

(4) A person’s retirement lump sum cannot exceed his permitted maximum.

(5) Subject to paragraph (6), where—

(a) a person to whom this regulation applies who has become entitled to payment of retirement benefits by virtue of regulation E4(5) before attaining the age of 60 has ceased to be in pensionable or excluded employment on or after 1st September 1997, or

(b) a person to whom this regulation applies has become entitled to payment of retirement benefits by virtue of regulation E4(5A) before attaining the age of 60,

the amount of the person’s retirement lump sum shall be the amount calculated in accordance with paragraph (2) multiplied by the appropriate factor.

(6) Paragraph (5) shall not apply where, in the case of a person who falls within paragraph (5)(a), notice to terminate the person’s employment was given or his resignation tendered on or before 22nd October 1996.

(7) A person who has attained the age of 75 is not entitled to a lump sum.

(8) Where a person has received phased retirement benefits the person’s effective reckonable service shall be calculated in accordance with regulation E5(14).

(9) Where an election to receive phased retirement benefits ceased to have effect by virtue of regulation E4A(6), then the amount of a person’s retirement lump sum on entitlement to retirement benefits is reduced by any lump sum under regulation E6 received pursuant to that election.

Lump sum in place of part of pension

E6A.— (1) Subject to paragraph (4) a person may, by an election made with the application for payment under regulation E33(2), elect to receive a further lump sum of such amount as is specified in the election (subject to paragraph (2)) in place of part of his retirement pension.

(2) The amount of such lump sum must be a multiple of £12 and cannot exceed—

(a) in the case of a 2007 or later entrant, his permitted maximum, and

(b) in the case of a pre-2007 entrant or a person with mixed service, his permitted maximum less his retirement lump sum.

(3) Where a lump sum is paid under this regulation, the annual rate of the person’s retirement pension is reduced by £1 for every £12 of lump sum.

(4) This regulation does not apply to a person who is a pre-2007 entrant and falls within regulation EA1(3)(a).

(5) Paragraph (6) applies where—

(a) a person has elected to receive phased retirement benefits and has also elected pursuant to this regulation (“the first election”) to receive a further lump sum in place of part of the retirement pension comprised in the phased retirement benefits, but

(b) the election to receive phased retirement benefits ceased to have effect by virtue of regulation E4A(6).

(6) Where this paragraph applies the person is treated, on becoming entitled to payment of retirement benefits, as having elected pursuant to this regulation to receive a further lump sum of the appropriate amount, and the appropriate amount is then reduced by the lump sum paid to the person pursuant to the first election.

(7) Paragraph (8) applies where a person to whom regulation E15 applies elected pursuant to this regulation (“the first election”) to receive a further lump sum in place of part of the first pension.

(8) Where this paragraph applies the person is treated, on becoming entitled to payment of retirement benefits pursuant to regulation E15(2) or (4) as having elected pursuant to this regulation to receive a further lump sum of the appropriate amount, and the appropriate amount is then reduced by the lump sum paid to the person pursuant to the first election.

(9) In this regulation—

(a) “the appropriate amount” is the amount (rounded to the nearest £12) such that the proportion which the rate of retirement pension forgone bears to the rate of retirement pension to which the person is entitled is the same as the proportion which the rate of retirement pension forgone pursuant to the first election bore to—

(i) the rate of retirement pension to which the person was eligible pursuant to the election made under regulation E4A, where the person falls within paragraph (5), or

(ii) the rate of the first pension, where the person falls within paragraph (7),

(b) “the first pension” has the same meaning as in regulation E15(1)(a).

Persons aged 75 or over

E6B.— (1) Where a person would be entitled to a retirement lump sum but for regulation E6(7), the annual rate of that person’s retirement pension shall be increased by an amount which represents the value of the retirement lump sum to which the person would have been entitled, payable from the date when that person’s application made under regulation E33 is received by the Secretary of State.

(2) The increase in the annual rate of the person’s retirement pension shall be determined by the Secretary of State after taking advice from the Government Actuary.”

(1)

1971 c. 56 to which there are amendments not relevant to this regulation.