Thinking of Opting-out

Although you’re automatically enrolled in the Teachers pension scheme, your membership isn’t compulsory. You can choose to opt out at any time after joining.

If you’re thinking of opting out of your Teachers pension, remember that if you do, you’ll miss out on a range of valuable benefits for you and your family. Your pension is an important part of your total reward package because your employer pays a significant pension contribution on your behalf. It also gives you peace of mind to know that you’ve started planning for your retirement. Make sure to look at our short video on the benefits of your pension before you decide, and you might want to speak to an independent financial advisor or the Money and Pensions Service.

The decision you make isn’t final and you can re-join the scheme at any time by contacting your employer. If you opt out of the scheme, and you’re still employed as a Teacher in Scotland, your employer will automatically enrol you back into the scheme every three years. You’ll also be automatically enrolled in the scheme if you start a new contract.

There are some common reasons why people consider opting out of their pension scheme. Have a read to see if this applies to you.

Is it too early or late to think about my pension?

It’s never too early or too late to start building up a pension, but the earlier you start the better your pension will be. Think about the lifestyle you want in retirement, and how this will be paid for.

I have other financial priorities and need the money for other things

Although it may seem that you’re paying a large amount of your pay towards your pension every month, your pension contributions are not taxed and therefore your contributions actually cost you less than the amount shown on your payslip. Your tax is worked out on your pay after your pension contributions have been taken.

I am concerned about tax on my pension and annual allowance implications

The Annual Allowance is the maximum value of the growth in your pension savings each year that can benefit from tax relief. If the growth in your pension savings over the tax year are more than the Annual Allowance of £60,000, you might have to pay a tax charge based on the amount of the Annual Allowance. Find out more by looking at our information on tax on your pension.

How to opt out

You can choose to opt out at any time by completing an opt out form. You might be able to apply for a refund of the contribution you’ve paid.

If you opt out of the scheme, your employer will stop deducting pension contributions from your salary and advise SPPA that you are no longer an active member of the scheme. If you do leave the scheme, you won’t accumulate any pension benefits during any period where you’re not an actively contributing member.

Opting out within three months

If you leave or opt out within three months of being enrolled into the scheme, your employer will automatically refund any contributions that you have made, less a deduction for tax.

Opting out between three months and two years

If you leave or opt out between three months and two years you can:

• apply for a refund of contributions (which will be paid less certain deductions)
• transfer your benefits to another public service pension scheme
• defer taking a refund until you’ve decided on your future intentions (for example, returning to Teaching at a future date or re-joining the scheme within 5 years).

If you don’t apply for a refund of contributions and you don’t return to pensionable employment within 5 years, SPPA will contact you to organise the payment of your refund.

Get a refund of your contributions