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Can’t see the wood...

Discussion in 'Retirement' started by tonilightwing, Mar 30, 2019.

  1. tonilightwing

    tonilightwing New commenter

    Long story short: I’m still working full time despite being well over normal pension age, but have only got 14 years service ( in final salary pension). I’m told by TPS that my best years run out in August 2019.

    My dilemma: I can’t work out if it’s better for me to ignore this and just continue contributing to build the pension or to take it in August and start a new one ( or opt out)
    My head has agreed to the break and to reemploy me on the same terms.

    TP are currently saying my average salary is £50000 ( but presumably part of this is due to the inflation uplift) The other bit of the conundrum is that I got promoted in September to a new salary of £49000 (around 2800 pa increase) But TP say this won’t factor in the pension calculation unless I maintain the salary for 3 years. Is this correct? Can’t see me doing another 2 - maybe 1.

    I understand there are tax implications if I earn more than my salary of reference ( so would have to drop down to 4 or even 3 days a week which I don’t really want to do -head has agree ) or have pension payments stopped when salary of reference point is reached

    I really can’t see the wood for the trees so any help would be very much appreciated
  2. diddydave

    diddydave Established commenter

    I'd get an expert in to go through your numbers, that way they can tailor it exactly to your circumstances. Obviously you started before 2007 but if you've had any significant breaks in service it could get complicated. Wesleyan did a free visit for me and I found them very good, they didn't push their products but focused on the various scenarios that I wanted to consider.

    You can ask TP for a list of your revalued salaries and then do the calculations yourself. I am presuming that all of your service is in the final salary scheme as you started before 2007. (I did my own little spreadsheet to work them out)

    From my reading of it your recent increase is not enough to trigger any restrictions (it would have to be more than 10% and if you were on £46,200 that would need an increase of £4620 to tip you over - so your £2880 is no problem). It suspect be that TP are referring to how it impacts on your best 3 years as the £50000 from 10 years ago is still higher than your current salary so it won't 'count' until you lose those years and then you get a new best 3 years which may now include your most recent salary - though it may take more than just this year for it to overtake the ones from 7,8 and 9 years ago. This is where you really need to look at your exact numbers. Get them from TP (you can use my spreadsheet to get an idea today - but get the real ones asap) One tip, if you send them a secure message through the website choose "Social Media Query" as that has a 1-day response target whereas all of the other options have a 10-day response time.

    If opting out does turn out to be the best option (big IF) then you may also consider asking your head for more if you agree to opt-out of the pension as you'll be saving them about 20%!
    Startedin82 likes this.
  3. tonilightwing

    tonilightwing New commenter

    Thank you so much for your detailed reply. I got no real joy from TP, but in fairness, I’m not sure I made myself clear and it very much depends on who answers the phone. I don’t understand the implications of the ‘restriction’ you refer to, but you’ve clarified my dilemma for me: if I let the 2009 uplift go, will my new best three overtake that figure.
    One last thing if I may, you refer to a spreadsheet- should there be an link or attachment?
  4. diddydave

    diddydave Established commenter

    It's a couple of posts down the list now: https://docs.google.com/spreadsheets/d/10x-lKLuc0PXi9C5JftanxmFVVh0PxNYKYEa70xljn38/edit?usp=sharing (Make a copy so you can enter your own figures)

    'Restricted salary' shouldn't affect you anyway: About half way down this page: https://www.teacherspensions.co.uk/members/planning-retirement/calculating-benefits.aspx

    I believe your best three years are worked out daily from the last 10 so already the salaries from 2009 (Jan to March) have dropped off the calculation so it's important to get the numbers looked at quickly just in case they do make a difference.
  5. tonilightwing

    tonilightwing New commenter

    Thanks. I read one of your previous posts and did ask if this ‘dropping off’ was happening and she said no, it made no difference so long as I took it before the end of August ! Is she wrong?
  6. Brianthedog

    Brianthedog Occasional commenter

    Your pension is calculated on the best of the following taken directly from TPS site:

    • the average of your best consecutive 3 years re-valued salaries in your last 10 calendar years or;
    • your last recorded 12 months of pensionable service before your retirement. So if you work at your current salary for a year or more that will be used most likely, as your best 3 years drop off. Don't forget, by continuing to pay and not taking your pension it will continue to increase. Using the calculators shows that 14 years at 50000 gives you a pension of £8750 max, whereas 15 years at 49000 gives you £9188 max pension. Working another year will increase that to £9800. But by continuing to work you will be earning £40k more than your pension. You will also get your state pension in a few years.
    • The ultimate question is, do you want to retire now?
  7. phatsals

    phatsals Established commenter

    However, by taking the pension now and opting into career average for 2 years at 1/57 that gives £1754 on top of the £8754 = £10504, plus, dare I say it, faster accrual?
  8. tonilightwing

    tonilightwing New commenter

    Thank you both. I’m already in receipt of my state pension and no, I don’t want to retire yet!
    Phatsals - I’ve been using cumulative % increase numbers you posted in August 2017, which says a 13.7% uplift for 2009, but another post says it’s 5% increase for 2009!
    Also your post seems to indicate a drop off at September , but I’m reading it drops off from April . I really do appreciate all the comments
  9. diddydave

    diddydave Established commenter

    That's probably a very good idea to consider. Even if your final salary pension isn't paid out because you are over the salary of reference it could lock in those high 3 years and depending on how old you are (i.e. how close to the NPA for the career average) you wouldn't have long to wait - if at all - after retiring for those benefits as well.
  10. phatsals

    phatsals Established commenter

    I think you have to actually take the pension to join the Career Average scheme for the new pension. Unfortunately you can't just lock in the benefits of one and join the other. I understand the higher tax would be a blow but it is possible to go for faster accrual and reduce tax there and possibly open a SIPP and claim higher rate tax relief on the contributions. It would only be for a year or two and may be worth the pain for long term gain.
  11. phatsals

    phatsals Established commenter

    If my memory serves, I think you can buy faster accrual at 1/50 so those 2 years could give £2k and reduce the tax liability.
  12. phatsals

    phatsals Established commenter

    When I posted in 2017 it was on the basis of my figures at that time. The figures I had were updated in April and September, some years I think had 3 revaluation points but they would reflect my changing contracts. The difference now is that the figures are 'live'. The 13.7% is a cumulative figures, the 5% an annual one.

    The April adjustments were and probably still are, based on the CPI rate the previous September, likewise salaries were increased in September and progress through the scale was applied in September. All of that has now changed.

    Ask TPS for a salary statement for the last 10 years, uprated for inflation. Do get in touch with Wesleyan and go through your figures carefully.
  13. diddydave

    diddydave Established commenter

    Yes, but the OP is over the NPA for the final salary so is most likely to be able to take it, but as they are also likely to be over the salary of reference it won't actually be paid...so locking it in for them...and then go on as you say to the CA - but it's so specific for them they really do need professional advice

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