Retirement can feel like one decision: When should I go?
But in reality, it is a series of choices about when to step back, whether to keep working, how to take your pension and how much income you will need.
1. Do your homework
Start with My Pension Online. Check that your service history, salary and details are correct, as gaps or errors can affect your estimate.
Bring other pensions, savings and investments into the picture too, alongside a State Pension forecast. The key question is not simply ‘What is my pension worth?’ but ‘Will my total income support the retirement I want?’
2. Know what you have built
Many experienced school leaders have benefits in both the final salary and career average sections of the Teachers’ Pension Scheme, potentially with different Normal Pension Ages.
Taking benefits early will usually reduce your annual pension because it is likely to be paid for longer. You may also be able to exchange some pension for a tax-free lump sum, but your yearly income will be permanently lower. Compare the long-term impact before deciding.
3. Get to grips with McCloud
If you are affected by Transitional Protection, you will receive a Remediable Service Statement when you apply to retire. This shows whether your service between April 2015 and March 2022 is better treated under the final salary or career average scheme.
You can request a Benefit Statement RSS through My Pension Online to start considering the options earlier. There is no universally ‘best’ choice.
4. Rethink the finish line
Retirement need not mean leaving leadership overnight. Phased retirement can allow eligible members to take part of their pension while continuing to work, provided pensionable earnings reduce by at least 20 per cent.
That could mean working fewer days or stepping down from leadership. Look at the effect on your pension, salary, workload and wellbeing together.
5. Don’t miss the deadline
Teachers’ Pensions currently advises applying six months before your proposed retirement date – but not earlier. Start planning well ahead of that window.
Ultimately, good planning is not about leaving at the earliest opportunity. It is about having the freedom to finish your career – and begin retirement – on your own terms.
Darren Mills is an education specialist financial adviser at Wesleyan.
