1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.
  2. Hi Guest, welcome to the TES Community!

    Connect with like-minded education professionals and have your say on the issues that matter to you.

    Don't forget to look at the how to guide.

    Dismiss Notice

Confused about pensions

Discussion in 'Personal' started by tafkam, Nov 5, 2011.

  1. tafkam

    tafkam Occasional commenter

    I understand the the TPS is a very good scheme. Or at least, I thought I did.
    But I've been browsing pension website calculators and putting in the amount I earn, and the amount I pay in pension contributions, and a suggested retirement date of 65... and all seem to say that I'd end up with a pension of more than half of my current salary, uprated by inflation.
    That's better than I'd get with the TPS. Now, I realise that the TPS, being defined benefit, is a much more reliable approach (at the moment), but doesn't this rather disprove the argument that any taxpayers would be subsidising my pension?
    Have I misunderstood something?
  2. phatsals

    phatsals Senior commenter

    I don't know how right it is, but I was told by a Financial Advisor friend that the lump sum takes it to half earnings. Have you tried the calculation using 1/60 to compare the two?
  3. TheoGriff

    TheoGriff Star commenter

    But will that private pension also give you the lump sum of 3 x your yearly pension?
    You need to add that to your calculations - it could pay off your mortgage, or buy you a nice mobile home by the seaside. [​IMG]
    That is the extra from the TPS that most schemes don't include.
    Best wishes
    TheoGriff. Member of the TES Careers Advice Service.
    I do Application and Interview one-to-ones, and also contribute to the Job Application Seminars. We look at application letters, executive summaries and interviews, with practical exercises that people really appreciate.
  4. tafkam

    tafkam Occasional commenter

    No... but then, if I was in the new scheme, nor would the TPS.
    I'm not doubting for a second that the TPS is a good scheme, but it's just interesting that I keep being told how much better it is than a private pension by the government, and that just doesn't appear to be true here...
  5. catmother

    catmother Star commenter

    The difference is that a private pension might not perform as well as predicted ot might disappear altogether in a financial scandal type scenario.
  6. Mangleworzle

    Mangleworzle Star commenter

    As above, it's the defined benefits of the teachers scheme that makes the difference. I heard on the radio recently that people retiring with a private stock market invested pension were getting about 1/3rd less than people a couple of years ago due to stock-mraket drops and falling annuity rates.
    Having said that, many private pensions start to move money from stocks to more stable investments in the 5-10 years before retirement so it may be largely a theoretical drop.
    The teachers scheme isn't really that fantastic, if you get full benefits after 40 years of contributions you will get a 50% pension and a lump sum of 1.5 years salary.
    The best thing about it is that there are employer contributions too, which is usually the best reason to join a company pension scheme. In other words, you can't put the same amount into a private scheme for the same personal cost as the employer won't pay their part into any scheme other than their own.
  7. kareneliot

    kareneliot Occasional commenter

    Are there any schemes with a higher payout for the same employee contribution rate?
  8. Mangleworzle

    Mangleworzle Star commenter

    There used to be a lot of them when I was involved in financial services and knew about such things - these days I've lost touch with any others.
    Directors, CEO's etc. will have better pensions, often non-contributary at all - oh and of course, MP's.
  9. kareneliot

    kareneliot Occasional commenter

    That's not really a scheme though is it. They tend to be personalized arrangements.
    MPs are you sure? Their contribution rates are higher than teachers.
  10. jacob

    jacob Lead commenter

    Lump sum is not 1.5 years salary, it is three years of whatever pension they decide to give you. I.E. If you were to get 10 grand a year pension, you would get 30 grand lump sum. This is irrespective of your final salary.
  11. And don't forget that most women in particular take time out ot have children and often return part time so don't make 40 years of contributions.

Share This Page