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Aahh! Pension plans scuppered?

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

  1. First Snowdrop

    First Snowdrop New commenter

    Lots of useful (if scary) info posted - lots of people benefitting besides the OP - thanks. I think I need to phone TP asap! I've already resigned (from Aug 31st) but was planning to delay taking my Teachers' Pension until about March, before the value would fall (in, as I thought, April). However, it now seems that the date I need to starting taking pension from would be before revaluation in September? Does anyone know if the date 2006 will drop off is the beginning of September, or later in the month? Thanks.
  2. phatsals

    phatsals Senior commenter

    You don't have to start taking pension until it suits you. As you are out of service and no longer contributing the 10 years stop at end of August so it would be from August 2006.

    The benefit of waiting before you take it is you have less of a reduction for ARB.
  3. pennyh.

    pennyh. Occasional commenter

    I sorted out other things clearly but I did not get a totally clear answer on that Sept drop off point 'First Snowdrop' so I can't tell you. It would be revalued in September, the 2006 would drop off but then there was a slightly contradictory comment that because I would be applying so close it probably would be included if that was the better valuation. If you get a clearer picture let me/us know. However having messed myself about I am going for 'bird in the hand' and peace of mind.
    First Snowdrop likes this.
  4. veritytrue

    veritytrue New commenter

    That's very much appreciated. Thank you Yoda!
    frangipani123 and cazzmusic1 like this.
  5. First Snowdrop

    First Snowdrop New commenter

    Thank you, all. I'll try to phone TP tomorrow & find the best way forward. I'll bring you up to date when I know more.
  6. cissy3

    cissy3 Star commenter

    I recently queried my ''best of ten'', as my pension is so small I just wanted to double check! I worked full time for most of my career (from 1980)

    However the past decade had been a mass/mess of a variety of temp posts, supply, PT and so on, and finally ending up on JSA. So in 2013 I finally took AR at 56.

    It was less than I had estimated, but the lump sum certainly came in handy, and, although skint, I am so glad that I don't have to work in schools anymore.

    This was the answer to my query:

    ''May I explain that the average salary used in the calculation of your benefits is the better of the following:

    1) The salaries for the last ten calendar years are increased using the Consumer Prices Index (CPI)). Then the average of the best consecutive three years' re-valued salaries in those ten calendar years is used;

    2) The pensionable salary received in the last 12 months before the date of retirement.

    It is not up to the member to make a choice, we calculate both methods and use the most beneficial. In your case Calculation 1 amounted to £xxxx and Calculation 2 amounted to £xxxx

    I hope I have clarified the position for you.
    Yours sincerely....''

    I realise this isn't much help to the OP, but I find the whole thing so confusing at times, perhaps someone else might find it useful.
    rooney1 and First Snowdrop like this.
  7. FrankWolley

    FrankWolley Star commenter

    But you will (obviously) receive this pension for fewer months as pensions are paid monthly for the rest of your life!

    FWIW I was considering doing this (delaying taking my pension) until a financial advisor showed me just how long it would take for even a few months delay to be worthwhile... It's a gamble based on how long you think you'll live, I guess!
    cissy3 likes this.
  8. Mrsmumbles

    Mrsmumbles Star commenter

    Thank you for these really helpful and interesting posts. A lot of teachers may not be aware, even younger ones can suddenly fall sick and need to leave sooner than planned yet not qualify for sickness and early retirement...myself included! One other thing I can offer: I agonised for ages about whether I would pull out of TPS as I went part time in 2015 after paying in 19 years to the final salary scheme. I was to,d so many different things by TPS?..sometimes easy to call, other times impossible to get into contact with. If you are a transitional, the big question is how to protect your best of ten years from final salary(and the lump sum) and what you should do about career average...pull out altogether? Freeze it? Women are badly affected as are arguably more likely to take over five years out, and I remember there was a lot of hoo har over what happened if I was out of teaching for more than five years and became a deferred member. I think you can end up deferred now if you quit in the summer and start again the following January...hardly any time out. A worry was would it lower my final salary arrangements etc. I think what I worked out is that it would lower career average as unless you could come back earning what you did before, it lowers the average. But there is a loophole. Whilst in service,chuck the biggest lump sum you can muster at TPS as an addition 'enhanced contribution' ...this buys you much more career average pension per month once it is paid out when you reach 67 (or older.) If you decide to come back to teaching later on, opt out of career average if you are out for over five years. I think that's right, but obviously this isn't legal advice, just what I was told after five long, painful calls to TPS. I'm sure most teachers over fifteen years away from 67 have no idea about the best average years, how time out affects the payout, hypothetical calculations, and topping it up. I don't use AVCs now...utter ripoff. Pay TPS direct instead!
  9. phatsals

    phatsals Senior commenter

    Buying extra pension is an interesting idea but it depends on what age you are. For me it was £4.5k for £250 pa index linked. Given tax relief it would be £3,600 - 15 years before a return. Better off in a SIPP for me.
    tuscanydays and Mrsmumbles like this.
  10. sabreflyer

    sabreflyer New commenter

    Hi all, well a bad night's sleep last night thinking about 2006 year will drop off the calculations this September and lead to an even greater drop in pension. I spoke to TP again today but was told 2006 did not drop off until the beginning of the financial year 6/4/17. I asked about which years would be used to calculate but was told they can not say. I asked why on my benefit statement it has best average salary as 2006-2011 and if it was because I am now part time; was told they did not know why and it should be 2006-2009.
    Conflicting answers to some of the same questions I asked yesterday. So none the wiser. Will be looking for an IFA today to do the maths for me.I guess anyone who will see me quickly and is familiar with TP will do as I urgently need to know if I should opt out immediately to save pension.
    Will update with progress later.
    tuscanydays, SteveKindle and pennyh. like this.
  11. buntbunt

    buntbunt New commenter

    Phatsals says:
    The years are 2006, 2007 and 2008 unless PT when the years move forward.
    Sorry if I'm being dense but I don't understand what this means. Can anyone be kind enough to explain?
    I am going part time to 0.6 in Sept after 10 years in the scheme full time. I called TP for advice on how going part time would affect my pension but no one mentioned this and I feel a bit anxious!!
  12. phatsals

    phatsals Senior commenter

    I had the same issue Sabreflyer.. I was given the date of 13th Sept 2012 as the end date for best years service which seemed very specific, and worked out that it was 1095 days worked pr 'days in' on your statement - yes I added them all up to double check. I felt very misled about the '3 years' as I assumed that is was 3 calendar years. I suggest you do the same and see what date you end at - I bet it's 2011 - same as your statement.

    It is because of this we have landed in low inflation years already, for me this is the 3rd consecutive year I have seen a fall in 'Average Salary'.
  13. Mrsmumbles

    Mrsmumbles Star commenter

    Yes, sorry, I should have added that in...the younger you are, the cheaper the extra year 'chunks' are. Basically if you're 'Diane' and a transitional member of the TPS website, I think it would pay off, but it is a lot to pay out at once. To get an extra 1k a year after 67 you need to out in ten times that. But worth it if you live past 77! I'm mid 40s so for me it worked. Except that now I am skint.
  14. Mrsmumbles

    Mrsmumbles Star commenter

    Would definitely use an IFA...TPS and all the details are so complicated!
  15. Mrsmumbles

    Mrsmumbles Star commenter

    As I j dear stood it, they now reckon it on the fte of your pt salary?
    cissy3 likes this.
  16. phatsals

    phatsals Senior commenter

    I really hope you find it's a mistake and the years should be 2006 - 2009, it would make a huge difference.
  17. Mrsmumbles

    Mrsmumbles Star commenter

    It's definitely your best three consecutive years. Two hours of phoning TLd can confirm this. I'm in a similar position to you...dropped part time after a much higher long term full time job. It will start to affect the years as the fte of the part time was still 7k lower. I'm now out of TPS from the 31st. Sometimes a break in service is ok, but after more than five years, I think it changes in some weird way. I realised that if I went back and into career average I'd be a lot worse off, as the lower salary and lower scheme would start to drop down all the higher credits in the final salary years. So I just threw a pot of money at the, last month, while still in part time pensionable service, and called it quits. If I return to teaching I will opt out, and, like others, do a Sipp, gun running trade. bank heist, or art forgery plan to top up. Hmmm...
  18. Mrsmumbles

    Mrsmumbles Star commenter

    They do make errors...ahem...such as forgetting five years of service I did in my first job at a college which has since closed down and merged! Thank goodness for local educational authority records. Very naughty of TPS.
    cissy3 likes this.
  19. pennyh.

    pennyh. Occasional commenter

    Thanks sabreflyer- I really appreciate all the help this site gives. I have made a friend register with the TP site and start thinking and actually looking at pension statements!
    Mrsmumbles likes this.
  20. sabreflyer

    sabreflyer New commenter

    Spoke to TP again. This time the person I was speaking to was more confident and was able to answer my questions.
    It was confirmed that the year 2006 drops off in April 2017. This will mean a sliding scale downward throughout the year from April 2016.
    The 2006-2011 is correct. If I work one more year the 2006 drops off completely and is replaced with the 2012. TP have said they will send some figures out to me. This way i can check for any difference between them and the online statement/ calculators.
    So now I will speak to an IFA to figure out how much extra I have lost since April and how much further loss to expect and whether this will be offset by the payments I make into the pension fund next year. Will need to consider whether to Opt Out or Retire sooner than I planned, or if I can still afford to retire!

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