What effect will reducing my FTE have on my pension?

Sandra Marcellus

I am a full-time teacher thinking of reducing my FTE. What effect will this have on my pension?

There are two ways for teachers who are on full-time contracts to reduce their FTE. Teachers can request a part-time assignment within their full-time contract or they can request a part-time leave of absence. Either option may reduce a teacher's pension.

Option one—Reduction in assignment. For example, a teacher granted a .75 FTE assignment for one year will earn .75 years of pensionable service for the school year. The remaining .25 FTE, however, cannot be purchased as pensionable service. The year's salary is annualized, which means that the salary the teacher actually earned at .75 is not used in the pension calculation. The .25 FTE salary will be added to the .75 FTE to make the salary whole. Taking a part-time assignment will not reduce teachers' highest five-year average salary, but will reduce pensionable service.

Option two—Request a partial leave of absence. A teacher can work .75 FTE and be on a .25 FTE leave. This .25 FTE leave can be purchased as pensionable service. The salary will not be annualized unless the teacher purchases the .25 FTE of service. For teachers needing service, taking a leave of absence may be the best option because teachers can purchase the service. For teachers in their last five years prior to retirement, taking a partial leave of absence may not be a wise financial decision because this will reduce their annual salary and their highest five-year average salary. The cost of purchasing service must also be taken into account. Generally, the cost of purchasing service is higher closer to retirement.

There are other factors to consider when deciding to reduce FTE. Teachers should not reduce their FTE or sign part-time contracts without first seeking advice from the Alberta Teachers' Association.

Finally, teachers interested in how a reduction in their FTE will affect their pension should review pension estimates using both a reduction in service and a reduction in salary to ascertain which reduction will have a lesser effect. Please note: Because of the uniqueness of each teacher's situation, it is not recommended that teachers use the Alberta Teachers' Retirement Fund's pension calculator, located on its website. Teachers are encouraged to contact their ATRF pension counsellor.

For more information, contact Sandra Marcellus at Barnett House in Edmonton: (780) 447-9403; toll-free outside Edmonton, 1-800-232-7208.