gototopgototop

SECTION 8: BENEFITS

 

1. Age Retirement

            1.3 Phased retirement

            1.4 Premature retirement on redundancy, or in the interests of efficiency 

2. Early Retirement with Actuarial Reduction (ARP)

3. Winding Down 

4. Ill Health Retirement 

5. Guidance for Completing the STSS: RET Part 2

6. Death Benefits 

7. Guaranteed Minimum Pension (GMP)

The benefits payable to scheme members are detailed in this section of the Employers Guide. Whilst the benefits are the same, the calculation of the benefits differ between members with Normal Pension Age (NPA) 60, and NPA 65.

 

1. Age Retirement

1.1 Arrangements for members with NPA 60

Members are entitled to receive payment of their benefits at normal pension age (NPA) of 60 without reduction. The NPA of 60 is not a mandatory age for retirement - members can continue in pensionable employment and claim their benefits on eventual retirement subject to scheme age limits.

Benefits Payable 

    • annual pension equal to 1/80 of the annual average of the best 3 years consecutive pensionable salary in the 10 years before retirement.  
    • lump sum retiring allowance equal to 3 times the value of the annual pension. 

In addition, as a result of the tax changes which came into effect on 6 April 2007, the scheme is unable to make a retirement lump sum payment to a member of the scheme who has reached age 75. Members who fall into this category must have their lump sum converted to a pension value.

 Lump Sum Choice (Commutation)

The regulations were amended from 1 April 2007 to allow members in pensionable employment on or after that date the option to give up part of their annual pension in order to receive a larger retirement lump sum payment. The maximum that a member can give up is 25% of the annual pension value. This limit is set by HMRC. In turn the member will receive £12 for every £1 pension.

Application for payment of age retirement benefits

When a member wishes to retire their employer should provide them with Form: STSS RET - Application for Award of Pension and Lump Sum on Age Retirement. Notes for completion of this form for both the applicant and employer are contained within the form. 

1.2 Arrangements for Members with NPA 65

Members with NPA 65 are entitled to receive payment of their benefits at age 65 without reduction. The NPA of 65 is not a mandatory age for retirement - members can continue in pensionable employment and claim their benefits on eventual retirement subject to scheme age limits.

Benefits payable

    • annual pension equal to 1/60 of the annual average of the best 3 years consecutive pensionable pay in the 10 years before retirement
    • no general retirement lump sum provision. 

Lump Sum Choice (Commutation)

Members receive a higher accrual rate of pension but do not automatically receive a lump sum. Members can, however, opt to give up part of their annual pension in order to receive a lump sum payment on retirement. The maximum a member can give up is 25% of the annual pension value. This limit is set by HMRC. In turn the member will receive £12 for every £1 pension.

 

1.3 Phased Retirement

A member who has reached minimum pension age (MPA) of 55 can elect to access some of their benefits and continue working. They can do this on 2 occasions only and must not extinguish their entitlement to benefits prior to actual retirement. Further information can be accessed from the SPPA website.

Application for payment of benefits on phased retirement 

To apply for phased retirement, the member and employer should complete the appropriate sections on the STSS:RET retirement application form. 

1.4 Premature retirement on redundancy, or in the interests of efficiency

The qualifying criteria are:

    • members must have 2 years qualifying membership;
    • the employer must certify that the member has had at least 2 years continuous STSS employment;
    • the member has not reasonably refused to apply for alternative employment or accept an offer of suitable employment;
    • the member has attained minimum pension age;
    • the member must be in pensionable employment.

The employer must also certify that the employment is being terminated:

    • by reason of redundancy;
    • in the interests of efficiency of the service.

 

2. Early Retirement with Actuarial Reduction (ARP)

The STSS allows for members to take Early Retirement with Actuarial Reduction. The amount of Actuarial Reduction (AR), depends on the member's age in years and months at the point of retirement. The AR, which applies to the annual pension and lump sum payment, is to take account of these retirement benefits being paid earlier than they normally would be. 

Current members of the scheme must have at least 2 years scheme membership to become eligible for ARP. Members with benefits preserved on or after 1 July 2002 are also eligible for ARP.

Arrangements for Members with NPA 60

Members may elect to receive payment of their ARP benefits from MPA of 55 onwards. Any reduction applied is in line with the factors which are based on age 60 retirements, ARP benefits will remain at the reduced level for life, however, dependant benefits are not based on the reduced level of benefit.  

Benefits Payable 

annual pension equal to 1/80 of the annual average of the best 3 years consecutive pensionable pay in the 10 years before retirement; or

    • annual pension equal to 1/80 of the last 365 days pensionable service; 
    • lump sum equal to 3 times the value of the annual pension with the appropriate AR applied.

Lump Sum Choice (Commutation)

The regulations were amended from 1 April 2007 to allow members in pensionable employment on or after that date the option to give up part of their annual pension in order to receive a larger retirement lump sum payment. The maximum that a member can give up is 25% of the annual pension value. This limit is set by HMRC. In turn the member will receive £12 for every £1 pension. A calculator for conversion is on the SPPA website.  For members who opt to take ARP, the commutation is based on the appropriate AR value of benefits.

Members with NPA 65

Members may elect to receive payment of their ARP benefits from MPA of 55 onwards. Any reduction applied is in line with the factors, which are based on age 65 retirements, ARP benefits will remain at the reduced level for life, however, dependant benefits are not based on the reduced level of benefit. 

Benefits payable  

    • annual pension equal to 1/60th of the annual average of the best 3 years consecutive pensionable pay in the 10 years before retirement with the appropriate AR applied. 
    • no general retirement lump sum provision. 

Lump Sum Choice (Commutation)

Members with NPA 65 receive a higher accrual rate of pension but do not in turn receive an automatic retirement lump sum. They can, however, opt to give up part of their annual pension in order to receive a lump sum payment on retirement. The maximum that a member can give up is 25% of the annual pension value. This limit is set by HMRC. In turn the member will receive £12 for every £1 pension. A calculator for conversion is on the SPPA website.  For members who opt to take ARP the commutation is based on the appropriate AR value of benefits.

Application for payment of benefits 

When a member wishes to take ARP their employer should provide them with Form STSS RET Application for Award of Pension and Lump Sum. Notes for completion of this form for both the applicant and employer are contained within this form.

 

3. Winding Down (WD)

Winding down is a phased retirement option which offers those members approaching their retirement age, the opportunity to continue in employment on a part-time basis whilst protecting their overall final retirement pension entitlement.

3.1 Eligibility

The regulations for eligibility to WD employment were amended from 1 April 2007 to allow members who have a NPA of 65 to be included.

To Participate in WD a teacher must have:

Attained the age of:

    • 56 if NPA is 60
    • 61 if NPA is 65
    • been in full-time service for a period of 10 years immediately prior to WD
    • accrued a minimum of 25 years teaching service prior to commencing WD (i.e. must have had a contract to teach for at least 25 years). The period may include, for qualifying purposes, a maximum break of 5 years during any break or breaks in teaching service which will count towards the requirement of having 25 years teaching service, (although will not count towards the calculation of benefits)
    • employers consent
    • reduce their working hours to either equal to or more than 0.5 full time equivalent.

A member must remain in WD employment up to a maximum of 4 years prior to NPA. Where a teacher ceases to be in WD employment (leaving during or at the end of the 4 years permissible) and returns to teaching service, the service credit during the period of WD employment will be removed.

SPPA will determine eligibility to WD in all cases and advise both employer and employee accordingly. Members should therefore ensure that they have received confirmation of their WD from SPPA prior to commencement of part-time hours.

 

3.2 Benefits

The benefits of WD employment are:

    • each year of service under the part-time contract will count as one full year for pension benefit calculation purposes
    • the final pensionable salary, for benefit calculation purpose will be the salary that the member received in the 365 days immediately prior to WD, it is index-linked to the actual point of retirement and
    • the contributions paid by both member and employer are based on the actual earnings paid for the part-time post.

The following do not count as teaching service:

    • previously purchased Past Added Years (PAY) or Current Added Years (CAY) (unless employed in a school or an educational role supervising teachers outside the UK)
    • transfers in, unless from another Teachers' Superannuation Scheme (i.e. England & Wales, Northern Ireland, Guernsey, Jersey, Isle of Man or elsewhere outside the UK)
    • the purchase of Additional Pension.

 

3.3 Applying for WD

Members must complete for STSS: WD12 to apply for WD. Employers must consent to the members application and provide the relevant information regarding salary and forward to SPPA for a decision on whether the member meets the criteria. SPPA will notify both employer and employee in writing of the outcome.

Employers are requested to submit a leaver form TSS2 for the end of the whole time hours and form TSS1 for the commencement of part time hours as soon as possible after receiving confirmation of acceptance of the winding down application.

 

4. Ill Health Retirement    

4.1 General background

Employers and Occupational Health Advisers must look at ways of helping members to remain in or return to work, e.g. consider rehabilitation/re deployment and consider other workplace adjustments, before concluding that ill health retirement may be appropriate.

Where a member is under NPA and applies for ill health benefits the ill health application form STSS: (INC) and medical evidence form STSS: (MED) should be completed and returned to SPPA. Both forms must be submitted together. It is possible for the member to supply more than one STSS (Med) if they think it is appropriate, but this is not necessary.

In order for the application to be valid, the declaration on the application form must be signed and dated by the applicant and the certification must be completed by the employer.

All applications and supporting medical evidence will be assessed by the Medical Advisors (MA) appointed by Scottish Ministers. Where they judge that the member is permanently unfit to teach, SPPA will ask the employer to complete a form to provide service and salary details.

Ill health benefits can be granted by the Scottish Ministers if they are satisfied that the applicant has become permanently incapable of any teaching until NPA (age 60 or 65).

There are 2 different levels of benefits that can be awarded:

    • Total Incapacity Benefits (TIB); and
    • Partial Incapacity Benefits (PIB).

TIB will be awarded if the member is assessed as being permanently incapable of teaching and other employment (the member's ability to carry out any work has been permanently impaired by more than 90%).

PIB will be awarded if the member is assessed as being permanently incapable of teaching but capable of other employment.

If the member is awarded TIB their service will be enhanced, based on half prospective service up to their NPA but if they receive PIB it will not be enhanced, but based on reckonable service. Provided the member applies within 12 months of leaving pensionable employment on grounds of incapacity, the application will be considered under the TIB criteria. If the member has been on a period of sick leave, maternity, paternity or adoption leave, or a career break which immediately followed a period of pensionable employment, the application must be made before the sick leave or period of absence ends.If the member does not apply for ill health benefits within these timescales, an application for ill health benefits can still be made but the service used will not be enhanced and the Preserved (or past) member has to meet the TIB criteria i.e. the preserved member must be unable to undertake any employment and be permanently impaired by more than 90%.

Benefits cannot be awarded to a member who has been barred for misconduct or who is under investigation by the Scottish Ministers with a view to barring. If, after the investigation is complete, the member is not subsequently barred, then an application will be considered.

The member must not have applied for phased retirement, premature retirement or actuarially reduced benefits in respect of the same period of employment. However, if phased retirement, premature retirement benefits or actuarially reduced benefits have been awarded in respect of an earlier period of service and the member subsequently taken up further employment in pensionable teaching service and later suffers a subsequent breakdown in health, the member is eligible to apply for ill health benefits.

In all circumstances the member must have completed the appropriate qualifying periods.

 

4.2 The Application Process

An application for ill health benefits must be submitted to SPPA through the employer, unless the applicant left teaching employment more than 12 months ago. In such case, the form should be submitted direct to SPPA.Where the medical evidence form has been completed by a specialist or GP, it should be sent to your Occupational Health Adviser, along with any supporting reports or correspondence. The application must be assessed by the employer for completeness.

When a condition is severe enough to warrant ill health retirement, whether this be a psychiatric or physical complaint, it is not unreasonable to expect that the applicant should have had the benefit of a specialist opinion. It would greatly help in the consideration of the application, if the medical information is provided by a specialist. If this is not possible, or the applicant has not been referred to a specialist, then the form should be completed by the applicant's GP or the employer's occupational health physician. Copies of all specialist reports or hospital correspondence relating to the present illness(s) should, however, be included.

All applications for ill health retirement will be considered on the basis of the medical information submitted with the application. It will not be possible for SPPA to obtain any reports on the applicant's behalf. Please note SPPA do not pay for any reports. 

 

4.3 After referral to Medical Advisers (MA)

The employer and the member will be notified by letter of the SPPA's decision. Where the application has been accepted, and the member is still actively teaching then the employer should arrange for this to cease with immediate effect. Details of the member's pensionable service should be supplied from the date you last made your annual return to the last day of pensionable service.

Where the application is rejected members have the right to appeal against this decision and should follow the appeal process, details of which are sent to the member on rejection.

 

4.4 Other Information

Commutation: If the member is seriously ill and having followed this application process, the MA concludes that life expectancy is less than a year, the member may request that the retirement pension be converted to a lump sum payment if the member requests it. This would be equal to five times the annual pension.Short service incapacity grant – Where a teacher is under 70 and has to leave pensionable employment through ill-health but does not have sufficient service to qualify for ill health benefits, a short service incapacity grant may become payable. To be entitled to this, the member must have at least one year of pensionable employment to their credit. As with an ill health application both forms should be completed. An application cannot be processed until both forms are received in SPPA.

Benefits payable: ½ x teachers pensionable salary x reckonable service

Re-employment: where a member has been accepted as unfit for teaching and subsequently returns to teaching for even 1 day after the award of ill health benefits this will result in the immediate cessation of pension payments. You must be satisfied that a person who has retired for reasons of ill health is medically fit to resume teaching.

 

4.5 Returning to STSS employment after retiring due to ill health

Ill health benefits are awarded because the member has been found to be permanently unable to do their own job.If the member has been awarded PIB and return to STSS employment their benefits may be reduced, this is known as abatement.  

If the member is awarded TIB they may rejoin the STSS and give up their benefits, providing they obtain a medical certificate from a medical practitioner.

Members are advised to contact SPPA directly about the effects of re-employment whilst in receipt of ill health benefits.

 

5.  Guidance for Completing STSS: RET Part 2

Ideally, the discussion about retirements should take place 4 to 6 months prior to the intended date of retirement. 

You should agree, with the member, the date of retirement and give them a copy of the application.  These are available to download from our website.  

You should complete Part 2 of the application and ensure that all relevant sections of Part 1 are completed and that the member has signed and dated the declaration. 

Once complete, you should send this to SPPA.  If there are any changes arising after the submission of the application it is your responsibility to notify SPPA as soon as possible thereafter.

 

Section 1. Personal details

You should complete this section, verify the details provided by the member and confirm that the type of retirement agrees with the type selected by the member.

If the member is leaving on Premature or Phased retirement, the employers certificate at section 3 or 4 must be completed.

Section 2A.  Full time staff

We request that information is supplied in a 365 days format for the period immediately prior to retirement.  We only need the total number of days in the period, less any unpaid leave days such as unpaid sick leave, strike days etc.  Local Authorities should note that the new school closure days, although unpaid, still count towards service for  members. 

To the last annual return date

The salary rate details required here should always be from the annual return year prior to the date of leaving, regardless of whether or not this has already been submitted.      

To date of leaving

Please provide the inclusive date to which earnings will be paid (or the date in the change of contract if phased retirement) and the salary rate from the last annual return to the proposed retirement date.

Salary Increases and unpaid leave

You should show here, any changes of salary rates or periods of unpaid leave that may have occurred within the information you have submitted to the last return date and to the date of leaving. The reason for unpaid leave should be noted. 

 

Section 2B.  Regular part-time staff

Part-time information should be supplied in a 1,365 format.  This is in accordance with circular 2011/13. The reason that we use 1,365 hours is to accommodate teachers working 195 days at 7 hours per day. When you submit under a 1,365 format, you should not include any holiday hours.

To last return date

The salary rate details required here should always be from the annual return year prior to the date of leaving, regardless of whether or not this has already been submitted.      

To date of leaving

Please provide the inclusive date to which earnings will be paid (or the date in the change of contract if phased retirement) and the salary rate from the last annual return to the proposed retirement date.

Salary Increases and unpaid leave

You should show here, any changes of salary rates or periods of unpaid leave that may have occurred within the information you have submitted to the last return date and to the date of leaving. The reason fro unpaid leave should be noted. 

 

Section 2C.  Supply

As a result of the recent COSLA changes to the way supply teachers for Local Authorities are paid, you should complete a separate entry for both short and long term supply teachers. 

Part-time information should be supplied in a 1365 format.  This is in accordance with circular 2011/13. The reason that we use 1365 hours is to accommodate teachers working 195 days at 7 hours per day. When you submit under a 1365 format, you should not include any holiday hours.

To last return date

The salary rate details required here should always be from the annual return year prior to the date of leaving, regardless of whether or not this has already been submitted.      

To date of leaving

Please provide the inclusive date to which earnings will be paid (or the date in the change of contract if phased retirement) and the salary rate from the last annual return to the proposed retirement date.

Salary Increases and Unpaid leave

You should show here, any changes of salary rates or periods of unpaid leave that may have occurred within the information you have submitted to the last return date and to the date of leaving. The reason for unpaid leave should be noted. 

 

Section 3.  Premature Retirement

This section of the form must be completed by a senior officer who has the authority to accept the voluntary early retirement.  You should ensure that the member is 55 or over and should have discussed this with them to ensure that they are aware of the terms they are retiring under either:

    • on the grounds of redundancy; or
    • the efficient exercise of the employers function.

You should advise if you are paying discretionary or mandatory compensation and advise if you would like to capitalise this.  You must also provide the details of the provider if you do not wish SPPA to pay the discretionary compensation. 

Section 4.  Phased retirement

You must certify that the member's phased retirement is in line with the Regulations. 

Once complete, please return the application directly to:

SPPA
7 Tweedside Park
Tweedbank
Galashiels
TD1 3TE

 

6. Death Benefits 

6.1 Death in Service  

If a member dies in reckonable service, or within 2 months of leaving (if the member is a supply teacher they have to have worked within the last 2 months) or within one year of leaving reckonable service by reason of incapacity, a lump sum is paid. The death lump sum for a member who dies in pensionable service after 1st April 2007 is equal to 3 x pensionable salary at date of death. This lump sum of 3 x pensionable salary at date of death is also payable if a member dies while on unpaid maternity or parental leave. 

Payment of the lump sum is made to the person nominated by the deceased to receive the payment, or in the absence of such a nomination to the deceased's spouse/civil partner or legal personal representative. 

Death in Preservation

The lump sum in this case would be either the lump sum that would have been paid if the member had retired at date of death, or contributions plus compound interest less any benefits already paid.

A lump sum is also payable if a member dies after ceasing to be employed in reckonable service, provided he or she had qualified for benefits. 

Death during re employment

The amount is 3 times the pensionable salary, less any lump sum already awarded.

Nomination for Death Grant  

There is the facility to nominate specific people to receive the Death Lump Sum or Deficiency Lump Sum. SPPA should be contacted for this form, or it can be downloaded directly from our website. A nomination can be made to more than one person, this is known as a multiple nomination. The nominations on the form must add up to 100% in total.

Application

In the event of a death in service the employer should submit leaver form TSS2 & STSS:(DIS) Form to SPPA. Separate arrangements exist for claims for death lump sum to be processed promptly by SPPA, using form STSS:(DTH APP).

 

6.2 Short Term Pensions

Action by employer  

Short-term pensions are payable to widows/widowers/civil partners or children of members who die in service. Employers should establish whether a short-term pension is payable under scheme regulations. The short term pension is then reclaimed from the employer's monthly contribution payment.

Female members

Prior to the introduction of widowers' benefits from 6th April 1988, a married female member may have nominated a beneficiary for a pension. If the nomination is in respect of a person other than her spouse and that nomination is retained (SPPA has approached the few members who fall within this category), this may result in short-term pensions being paid only to the beneficiary. The long term pensions may be paid to both the nominated beneficiary and the spouse. The rate of pension payable to the spouse, however, will be lower than it would otherwise be. Such occurrences will be rare and if short-term pensions are due SPPA will contact the employer.

Short-Term Pension


Category

Payee


Duration (months)


Rate of Pension

1

Spouse, civil partner or adult nominated beneficiary (no child(ren))

3

Annual rate of salary on last day of reckonable service

2

Spouse, civil partner or adult nominated beneficiary (1 child or more)

3

As above x 2

3

No spouse, civil partner or adult nominated beneficiary (1 child or more)

6

As above at 1

Notification of a Members Death in Service


SPPA should be notified of a member's death on form STSS:(DIS 2) the deceased member's employer should forward form STSS:(DTH APP) to the deceased member's spouse, civil partner, nominated partner or, if there is no surviving spouse, civil or nominated partner, to the personal representatives of the deceased member for completion and return to SPPA direct as soon as possible.  

On receipt of all parts of form STSS:(DTH APP) & (DIS), SPPA will immediately arrange to make prompt payment of any death lump sum which may be due to the spouse, civil partner or personal representatives.

Notes for the completion of form STSS:(DIS)

The employer should complete details on form STSS:(DIS) and send it to SPPA as soon as possible along with a completed TSS2 – Leaver form. At the same time, the employer should enter the member's superannuation reference number in the top right hand corner of the accompanying form STSS:(DTH APP). This form should then be sent to the deceased members spouse or civil partner or, in the absence of a surviving spouse or civil partner, the personal representatives of the member for completion and return direct to SPPA. Employers should refer any enquiries to SPPA. 

 

6.3 Civil Partners

The introduction of the Civil Partnership Act which came into force on 5th December 2005, enabled same sex couples to form a civil partnership and thereby have entitlement to survivor pensions. There is now a facility to pay short and long term pensions to civil partners. The amount payable on death is based on service from 6th April 1988, the same as widowers' benefits. It is also possible to purchase service prior to 1988 to increase these benefits. SPPA should be asked for more information regarding this facility. Short-term pension to Civil Partners will be paid by the employer on receipt of the form STSS:(DTH APP) and having produced the Civil Partner Registration certificate.

 

6.4 Children's Pensions

There may be entitlement to dependant child pensions. Upon the death of a member while either in pensionable employment or while in retiral, a child's pension may be paid initially for 3 months, then a long term pension based on family benefit service from 1972.To qualify for the dependant child's pension, a dependant child must be unmarried and under age 17. If over age 17, they must be in full time education, undertaking a course of at least 2 years' duration. Documentary proof of courses undertaken will be required. All children's pensions will cease on their 23rd birthday. If there is a break in full time education of more than 18 months, there will be no further entitlement to dependant child's pension.  

There is provision to pay continuing child's pension where the child is permanently incapacitated and unable to earn a living. Any such cases should be referred to SPPA with appropriate supporting medical information. These cases will be referred to the SPPA Medical Advisers to determine continuing eligibility.

 

7. Guaranteed Minimum Pension (GMP)

The scheme provides for a level of benefit equal to or greater than the value of the GMP. A test in line with the Department of Work and Pensions (DWP) legislation, must be completed before any payment of benefit can be made. SPPA will contact HMRC to obtain information on the current value of a member's GMP. If the level of benefit is less than the GMP amount provided by HMRC, payment cannot be made.

Link to Scottish Government Website