- Nearly half (48%) of teachers expect not to have enough money to fund their retirement
- Three quarters (75%) of teachers plan on leaving the profession before retirement age
- 37% of teachers will need to keep working in some form to fund retirement after they start drawing their pension benefits
As teachers are heading back to the classrooms this term, almost half (48%) say they will not have enough money to fund their retirement – highlighting a potential retirement ‘funding gap’ within the profession according to new research from Wesleyan, the specialist financial services mutual for teachers.
Three out of four (75%) UK teachers say they are looking to leave the profession before the normal retirement age for their pension savings, even though many haven’t saved enough to fund their retirement.
The research also showed a trend in ‘flexi-retirement’ – teachers continuing to work after they have ‘retired’. Nearly two fifths (37%) of respondents to Wesleyan’s survey said they will need to keep working in some form after they start drawing their pension benefits.
The main reasons for doing so were to generate income for luxuries (27%) and one in six (14%) said they would need to work to ensure they could meet their basic needs.
The results found that many teachers are confused by the Teachers’ Pension Scheme (TPS). Just a third (34%) of teachers said they fully understand the TPS rules around ‘phased retirement’.
Phased retirement options give teachers the choice to access up to 75% of their pension benefits while still working and contributing to the scheme – but what they are finding confusing are the rules and regulations around working patterns and salary to access this option. Many teachers do not realise this is an option for them.
Additional research with members of the teachers’ union the NASUWT found that 22% teachers planned to take early retirement because of stress/workload pressures. A further 21% stated that they were retiring early to have a better work/life balance (21%)*.
Glen Roberts, Area Manager at Wesleyan, said: “September is a natural time to reflect on career ambitions and the new school year ahead, and it’s traditionally a month when we get a surge in enquiries about retirement planning. It is concerning to see that so many teachers are worried or confused about their retirement.
“The traditional concept of retirement as a time when people fully leave the world of work behind is becoming more and more outdated. As our findings show, teachers are increasingly choosing to work in retirement. For a small but nonetheless significant proportion, it will be a necessity so they can meet basic needs – a worrying finding.
“A financial adviser really can help make the planning process easier to manage – including helping to determine whether teachers have enough to afford the retirement they want, and how to make early or flexi-retirement possible.”
The Retirement Living Standards guideline is that an individual will need £33,600pa in retirement to live comfortably**. This means they will be able to cover everyday cost plus pay for some luxuries such as holidays and beauty treatments. However, the average pension for a male teacher is £16,034pa and £11,581pa for a female teacher.*** This would mean a shortfall in income of up to £22,019 in retirement. This shortfall will reduce to approx. £12,392 if the full flat rate state pension is paid from state pension age.***