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Aahh! Pension plans scuppered?

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

  1. Dunteachin

    Dunteachin Star commenter

    Crikey! So glad I took ARB at 55 when I was made redundant. That was 6 years ago.
    Am I right in thinking the pot would have just sat there doing nothing and not going up with inflation, had I waited until 60 to access it?
    If that's the case, I did the right thing - the monthly payments have gone up a fair bit over the last six years.
  2. Sundaytrekker

    Sundaytrekker Star commenter

    Can I give a different perspective? Maybe they shouldn't have put in the inflation link in the first place when teachers were getting only small pay rises if any. It has meant that those of us who have worked hard for promotion are not any better off for it. If you have stayed on the same salary for 10 years the inflation link has served you well. If you have been moving up all that time your final salary can be the same or only slightly more than the average adjusted salary from ten years ago. I am due to retire and it is making me wonder whether it was worth working hard for promotion for the past ten years. My pension would have been almost exactly the same if I hadn't.

    However, we are where we are so everyone should be made aware of the effects of this and do their own calculations. If it's more worthwhile to opt out, retire earlier or stop then take a different job. Go for it!
    Startedin82, plot71 and emerald52 like this.
  3. old_dobbin

    old_dobbin Occasional commenter

    My net retirement pension is 90% of the current net pay being earned by teachers at the top of the main scale in my last school- and what I'd be earning if I were still there. I'm better off now than I was when I was working because my mortgage is now paid off and I have no travel expenses. I use the free bus pass a lot now. Teachers have to pay NI and higher pension contributions. It shows how teachers' pay has not kept pace even with CPI inflation.
    Yoda- and emerald52 like this.
  4. heldon

    heldon Occasional commenter

    2007 - 3.6%
    2008 - 3.9%
    2009- 5%
    2010- 3.1%
    2011- 5.2%
    2012- 4.5%
    2013- 2.6%
    2014- 1.5%
    2015- 0%

    Your pension will be based on the highest from the last three in ten years revalued with the cpi index. I got the cpi figures of the web so not sure how accurate they are.
    Startedin82, Yoda- and emerald52 like this.
  5. applecrumblebumble

    applecrumblebumble Lead commenter

    Your your pension would continue to grow with rpi 6 years ago, Dunteachin and will continue to grow with cpi from about 2012/2013. As has been pointed out we seem to be in a long period of poor pay rises and low inflation and this is now beginning to impact on the average salary part of our pension (average of the best 3 years in the last 10 years beyond the age of 50). So for those of you who were on TLR and stepped down to classroom teacher you would begin to see your average salary decreasing, if you stepped down 7 years ago, The next few years will be critical to anyone thinking of retirement.
    emerald52 likes this.
  6. diddydave

    diddydave Established commenter

    I've asked TP for the factors they multiply each year but using Phatsals numbers it looks to me that if I was retiring in August 2017, it works out that I am paying £5000 this year to be £60 a year worse off...will need to look at 'opting out' - of course that means losing the in-service death benefit so I'll probably need to put aside £500 or so to cover some life insurance (easily covered by the £5000 saved!).

  7. yodaami2

    yodaami2 Lead commenter

    I still don't get it. If I stay in the scheme is my lump sum and yearly pension going to drop. As it did this year. I've worked out that last year I paid £300 per month, that's without employer contributions, and my lump sum dropped as did my monthly pension. What if I had invested that £300 x 12 in something else, or indeed just held it n to it. Well clearly at the very least I could have had £3,600 to add to my lump sum. I just don't get it. Where did the employer contribution go? Never mind my contributions. And if it's a better bet not to be in TPS, then what's the point of the scheme? Why is it considered such a good "gold plated " pension?
  8. mrkeys

    mrkeys Occasional commenter

    Ring and ask TPS.
    Were you previously FT, and are you now PT?
    Did you previously earn a higher salary?
    All these factors need to be explored.
  9. FrankWolley

    FrankWolley Star commenter

    If you are over 55 (or younger but have medical reasons for retiring now) you can retire and take your pension - yes, a smaller one than if you continue to 65+, however larger than you fear you may get in the future Then maybe you can then return to work (has to be in a 'new' job, but could be your current one of the school allows you to start a new contract after a day's break).

    But what you should not do, under any circumstances, is stop paying into your pension.

    [The above is, of course, just my personal view...]
    emerald52 and Lara mfl 05 like this.
  10. Mrsmumbles

    Mrsmumbles Star commenter

    The final salary was good. Career average is less advantageous, but better than some. I think you might be better off with a break in service to protect your old final salary pot. If you are a transitional member, there are two pots for you...the now closed final salary pot, which ended in April 2015, and the lower rate career average. Career average works in clumps of £250, from whatbIncan understand. You can boost it up to higher profits by opting into faster accrual. It costs. BUT...this utterly failed me as I was forced out the same pensionable year and didn't start the new job until sixty days had elapsed. I lost all that extra money. To get round this, if you are on a temporary contract, you could top up the career average pension a month before the contract ends by a few thousand, to buy extra years of pension. This offsets the lower career average pension accrual and avoids wasting contributions as I did. I wouldn't touch a job now, fixed term or temp, which didn't give me access to TPS. You might as well do tuition for better pay and fewer hours. The government is skint so thinks this is the way to reduce its deficit. It is also the way to slash retention and trigger the current staffing crisis.
    emerald52 and Lara mfl 05 like this.
  11. phatsals

    phatsals Established commenter

    Yes it is going to drop. Inflation has been low now for some years, previous salaries are uprated by inflation, now the high years are falling out of the 'last 10' calculation. Please see the figures I poster further back on this thread.

    If you ask TP they will send you a breakdown of your last 10 years salaries .
    for inflation. You will see they are beginning to fall off with the net result that your 'average salary' is dropping. As I work PT it started to fal 3 years ago and this year fell dramatically, eg I expected a .5 scale increase or around £250 increase, instead it was £84. my 'average salary has so far fallen by £3k over the last 3 years.

    I have had no alternative but to leave the scheme. If I stay in longer I will have less as a pension than I do now.

    Ring TP and ask for a statement. It will really bring it home.

    This seem to apply to Final Salary only pensions when you are within a few short years of retirement.
    Last edited: Oct 17, 2016
  12. sabreflyer

    sabreflyer New commenter

    Thought I would give an update. i contacted three different accountants and IFA s who all told me they couldn't help. The accountants said to contact an IFA and the IFA s were unaware of the average salary problem and said the people to talk to were tp. So with nobody willing to take a fee to do some calculations did them myself and have worked out that I need to opt out in the next month or so.
    I was told that if I fill in the form online the opting out will take place at the start of the next month ( been told this about 3 times) today I was told no this will only happen the following month after my school have completed their part, part B of the form. So I shall wait a few days then contact them again and see if I get a different answer.
    School has budget problems and asked people to let them know about plans to retire/ changing hours. So I am tempted to ask if they would pay redundancy but my subject is not overstaffed so not very optimistic. On the other hand I had a break from working with the local authority between jobs and so I think this would count as a break of service and make me very cheap to pay off?
    I found the info from the OP in a different thread regarding the possibility of TP going as far back as almost 11 years when calculating average salary really interesting and am trying to sort things out so I opt out before the start of a new financial year which is what the OP suggested happened with them. TP suggested I would have about 6 months of potential time to pay into a career average if i sorted things that way but I am not sure such a short time would have any real impact?
    Anyway, I have come to terms with the loss of expected pension and I but I am frustrated that all this time later I am still having to make phone calls to check the information I have been given is accurate and that there seems no way of really knowing what pension i will get; just a 'ball park' figure and fingers crossed!
  13. phatsals

    phatsals Established commenter

    Hi Sabreflyer, on the basis of all this I opted out of the scheme in August. After much consideration I decided the way forward was ARB then rejoin the new Career Average schemefor any further work I do.
    I was more than pleasantly surprised when I did get my pension (this week) as they did go back further due to a previous 'break in service' and I got a higher amount than I was expecting. If they hadn't it was going to drop again as when my service was updated to 31st August the 'Average Salary' had fallen again from the July figures.

    As far as 'opting out' is concerned just fill in the form online specifying the date you want.
    First Snowdrop and emerald52 like this.
  14. sabreflyer

    sabreflyer New commenter

    Thanks Phatsals,
    I'm glad things worked out ok for you. I just need to make the plunge now and fill in the forms!
  15. markandrewberry1

    markandrewberry1 New commenter

    Is 'beyond the age of 50' really part of the calculation?
  16. heldon

    heldon Occasional commenter

    Not as far as I am aware
  17. applecrumblebumble

    applecrumblebumble Lead commenter

    This part was in the context of stepping down from a TLR. The only thing you need to know is your salary of reference (on TPS statement) which changes with pay rises (small in recent years) and inflation which has also been small in recent years.
    The salary of reference, used to calculate your pension is based on the best salary in the last 10 years. Since salaries have not increased much by way of pay rises the inflation indexing has a bigger effect. If you go back and look at the figures you will see that the higher inflation figures were back in 2006 ish so if inflation is bigger than pay rises then when it falls the salary of reference falls. This has been a concern to teachers retiring in recent years.
  18. markandrewberry1

    markandrewberry1 New commenter

    Thanks applecrumblebumble.

    Being 53 and in the situation of falling real pay, I'm in the situation you highlight. If years before 50 didn't count I would have more recent 'best years' and less incentive to get out soon.

    I'm not quite sure how losing a TLR brings in a connection with the age of 50, but I don't have that concern. I hope.
  19. applecrumblebumble

    applecrumblebumble Lead commenter

    The only thing to be thankful for is provided there is inflation your salary of reference will still keep going up. So at least your pension reflects the ‘real’ world.
    The TLR part (average) was to stop schools bumping up salaries close to retirement by moving people up the TLR point - as if that would happen. In the same way as you cannot have more than a 5% salary increase in your last year before retirement, mmh seen that happen to a few academy principals.

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