Research commissioned by Wesleyan Financial Services suggests 22 per cent of teachers plan to retire before their ‘normal pension age’ – the age at which they would typically start accessing their retirement benefits.
But retiring early could have significant financial consequences for teachers.
Here’s how the Teachers Pension Scheme (TPS), which most state school teachers are enrolled in, works, and how an early retirement could impact a teacher’s income in their later years.
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With the TPS, teachers pay a portion of their salary to be a member of the scheme with their school paying in too. They then get a fixed payment in retirement each year for as long as they live.
Under the TPS scheme, staff contribute a minimum of 7.4 per cent of their salary and schools contribute 28.6 per cent, which is used to fund the pensions of current retirees.
Depending on when they started work, most teachers have a ‘normal pension age’ of 60 or 65.
How much would you lose by retiring early?
For a teacher currently aged 50 who started teaching at age 22 and looking to retire at 55 on a salary of £50,000, they would lose £5,644 a year in retirement.
For a teacher currently aged 50 who started teaching at age 22 and looking to retire at 55 on a salary of £70,000, they would lose £7,902 in retirement.
For a teacher currently aged 50 who started teaching at age 22 and looking to retire at 60 on a salary of £70,000, they would lose £4,091 in retirement.
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