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Aahh! Pension plans scuppered?

Discussion in 'Retirement' started by sabreflyer, Aug 7, 2016.

  1. sabreflyer

    sabreflyer New commenter

    My pension statement was recently updated on the TP website and it shows my average salary has been reduced and I have lost well over a thousand on my lump sum and about £500 a year off my annual pension sum.
    Now this comes at a time when I had decided I had enough and having read this forum and learned a lot ( thanks to you all) I decided to finish at 55 (this summer). Spoke to TP when they changed the website and asked about potential changes due to differences in inflation but was told they could not help me with that and to use the calculators. Re calculated outgoings as things were very tight and decided to give it one more year and finish summer 2017. Now it appears the extra year will not be what was estimated before the update on TP.
    Furthermore, the TP statement shows the 2015-2016 statement with reduced salary and the Current statement (a difference of 5 days) shows a further £10 reduction in average salary.
    1) Does this mean that the longer I continue to work next year the lower my average salary will be and hence my pension ?
    2) Would I be better off leaving at Christmas?
    3) Does anyone know how to calculate the effect of inflation so i can work out if there will be future reductions?
    Feel devastated. Any help/ replies much appreciated.
  2. FrankWolley

    FrankWolley Star commenter

    i'm not qualified to offer advice,, but I can feel for your pain. In your shoes I think I'd seek expert advice (Can your Union advise on an advisor?), even if I had to pay for it.

    Could you take your pension on ARB, but (after a break of at least 1 day) start another contract at our current school? Is it worth sounding out your HT on that idea?
  3. frangipani123

    frangipani123 Lead commenter

    I hope someone more expert than me replies, but just wanted to offer support.

    I took semi-retirement a year ago because I couldn't stand it any more. I cut all my bills to the bone, paid them a year in advance because it was cheaper, bought a small freezer so I didn't have to shop regularly etc etc. I'm sure you've looked at all this. A year on I feel more 'like me', have done some exam marking plus tutoring to fill the coffers. My pension is very small and so I supplement it with my savings and work. I have no regrets whatsoever and wish I could have gone at 55 rather than 57.

    Maybe the Teacher Support Network can help:

    http://teachersupport.info/financial support for teachers#.V6dBYPkrLtQ

    Do let us know how you are doing.
  4. wanet

    wanet Star commenter

    Average salary may be reduced due to the effect of moving away from the era of inflation. Will gain the effect of more years of pension, but not sure which will have more effect.
    emerald52 likes this.
  5. phatsals

    phatsals Senior commenter

    I have had exactly the same experience. I've had a print out from TP of all my salaries from the last 10years uprated for inflation. All salaries from 2010 fall off a cliff and as I work PT it has affected me more quickly than FT colleagues.

    I had an accountant look at the figures and if I stay in there will be a 15% drop. All the high inflation years are disappearing and by staying in the scheme the 10 years roll forward. I have calculated that if I stay in 1 more year I will have a lower pension than if I freeze it now. I have reluctantly taken the decision to leave the scheme leaving the Average Salary where it is. I will pay into a SIPP instead as I also intend to give up within the next 12 to 18 months.

    This year I contributed .55 and the effect on my TP was £84 increase instead of the expected £270. Next year I believe my projected pension will in fact be less if I stay in. It's a sickening feeling.
  6. veritytrue

    veritytrue New commenter

    I don't wish to highjack the thread in any way but I'm a bit confused by this. I have recently stopped working at age 54. Obviously I understand I won't be able to add further to my TP but I had assumed it wouldn't actually go down before I take it at age 60. Is this incorrect? I'd be grateful for any replies to this.
  7. Yoda-

    Yoda- Lead commenter

    It will not go down veritytrue. Your last 10 years are not changing like the original posters because you are no longer working.

    This is not financial advice. You should check this with teacher pensions.
    emerald52 likes this.
  8. Yoda-

    Yoda- Lead commenter

    I would keep the following in mind:

    Most posters seem to find that they get slightly more in reality than the calculators show on the TP website.

    Teachers' pensions are usually increased in April based on the preceding September's Consumer Prices Index (CPI).

    Try not to feel desperate about the unexpected reduction. The reduction you probably could cope with.The £500 a year reduction could be made up by one weeks supply a year. The £1000 lump sum reduction could be made up by two weeks in total. So you could do a total of around 14 weeks to plug the unexpected £ 7000 funding gap up to your state pension. In reality it's likely to be a smaller gap because of the first two points.

    Whether you go at Christmas or not, is for you to decide. You need to take specialist advice, but it's hard to identify people other than teacher pensions that have the information you need.

    Try asking teacher pensions which three of the last 10 years service would be used to calculate your pension. This may help you decide the timing of your departure from teaching.

    This is not financial advice. I am not a financial adviser. You should check this with teacher pensions.
    emerald52 and cissy3 like this.
  9. phatsals

    phatsals Senior commenter

    The years are 2006, 2007 and 2008 unless PT when they will move forward. The last year where inflation caused a significant uplift was 2010 when it was 5%. Since then it has been virtually 0.

    It dropped considerably between 2005 and 2006, it then drops again.

    The days of 25% more than you ever earned are over. From next year I forsee a lot of people will realise the impact of low inflation and by then it will be too late.

    As I said earlier, I obtained the figures from TP.
    tuscanydays, cissy3 and Yoda- like this.
  10. Alldone

    Alldone Senior commenter

    Wow - I'm so glad I retired last year. I thought they just used your salary for calculating the pension, so was very pleased and surprised that it was based on one that was 27% more than actual.
  11. phatsals

    phatsals Senior commenter

    The following are the cumulative % increases since 2006. The pensions are revalued in September in line with inflation, the pension payment is increased in April.

    2006 - 28% ( this will drop off in September)
    2007 - 23.7%
    2008 - 18.6%
    2009 - 13.7%
    2010 - 2.7%
    2011 - 2.7%
    2012 - 2.7%
    2013 - 0%
    2014 - 0%
    2015 - 0%

    This is from TP actual pension figures.
  12. Yoda-

    Yoda- Lead commenter

    Crucial information for some people phatsals. I hope they get to read it.

    I think the OP sabreflyer, needs to think about the significance of these figures. 2016 dropping of in September could possibly explain his pension forecast going down.

    This is not financial advice. Check this with Teachers pensions.
    Last edited: Aug 8, 2016
    frangipani123 and First Snowdrop like this.
  13. pennyh.

    pennyh. Occasional commenter

    Thank you for the above. chart. Do you know whether this mean that the average salary I have ending March 2016 will be lower for any calculations on ARB for a pension to start this autumn but after September? (your 2006 figure says it will drop off and my average best 3 years is currently based 2006-2009)
  14. Yoda-

    Yoda- Lead commenter

    You could have this conversation with teachers pensions. They should be able to tell you.
  15. phatsals

    phatsals Senior commenter

    Check with TP. I can't see there being much difference., it's the next few years that will hurt rather than the next few months.
    tuscanydays likes this.
  16. sabreflyer

    sabreflyer New commenter

    Thanks so much for all your replies. It is great to have had a range of positve responses that look at it from different angles. I phoned TP today and it is indeed a result of 2005 falling off the average salary calculation. They said they would send me the % increases and I should seek advice from a IFA regarding the best thing to do to avoid any further drops in pension.
    Thanks Phatsals for the figures, I can get working on it myself straight away.
    My first step will be to work out if I need to retire sooner than the planned end of August or whether to opt out of the pension.
    Phatsals, it appears we are in a similar situation: I have been PT for a few years and my pension is calculated now using 2006-2011 so i guess that means I am in the same boat as you and may end up with less if i stay another year.
    frangipani123 and cissy3 like this.
  17. SteveKindle

    SteveKindle Occasional commenter

    I'd laugh if it were funny - my 'official' retirement date is 2025, though I might be going a year or two before that, so it'll be either 0%, 0% or 0%.

    I'm looking for a bright side - I really am.

    Okay, here goes. History suggests that teachers salaries are squeezed until you can hear the blood dripping, but that a reasonable leg up is offered (think UPS adding £4k in the late '90s) at the last minute. We've seen abysmal rises for quite a while now, due to continue for another 3 or 4 years, but I suspect we'll be thrown something in the next decade.

    In addition, if inflation takes off after you retire, your pension will rise accordingly.

    It's not much, I know, but it's better than nothing.
    cissy3 likes this.
  18. sabreflyer

    sabreflyer New commenter

    I do feel your pain, Steve. Hopefully I can avoid too much loss through damage limitation strategy but the other half is in the same boat as you.
    I do think you are right though, fingers crossed you will reap the benefit of government policy change to win voters and gain a decent pay rise between now and then.
    cissy3 and SteveKindle like this.
  19. SteveKindle

    SteveKindle Occasional commenter

    On the plus side, I'm using the calculator to estimate my pension based on my current salary, with no increase for inflation. So I may not be getting more than I hope, but I shouldn't be getting less.
  20. pennyh.

    pennyh. Occasional commenter

    Thank you all, I got through to TP straight away ( 10 secs after pressing 6) and sorted out my form and dates for ARB. Don't understand a lot of it but know what to do re date to get my full calendar month count. Any doubts I had about packing it in early or wondering should I wait longer before claiming vanished. So at the start of Sept when I am out of service and contract my form goes in. I should have followed FrankWholley's advice months ago but what with one thing and another I never did anything-hey ho! Husbands full term pension details arrived last week (form went in start of June)
    cissy3, plot71, wanet and 1 other person like this.

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