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Early retirement?

Discussion in 'Retirement' started by HS65, Jun 4, 2019.

  1. HS65

    HS65 New commenter

    Quick query and will appreciate thoughts ...... I have built up 20 years and 200 days in TPS. I've been doing supply since the start of this academic year as such not been paying in. I cant in all honesty see myself going back to a permanent job direct with a school so I'm thinking about erly returement at 55 (about 8 months time).

    I've looked at the figures for my current frozen pesnion and it doesnt look like theres a great deal of difference per year in the pension amount. Obviously it goes up a little for each year I wait, and lump sum. but that seems to be counteracted by the number of years I'fd be paid.

    Anything else I should be hinking about or may have missed? I would carry on doing supply to top up the pension.
     
  2. diddydave

    diddydave Occasional commenter

    Beware of the 'obviously'...it isn't actually guaranteed...at 55 this year I'm guessing you are a protected member with all your service in the final salary (or 80ths) scheme.

    As always I'd recommend you find an expert, I am not one - just someone who has taken a keen interest in this as my wife has just claimed her pension and I'm due mine in a few years.

    I suggest you get the exact numbers, not just the years and days of service but your last 10 year's worth of salaries - these have to be adjusted for inflation but TPS can do that for you - and this is where it can get interesting...

    Interesting because, if like most of us, you have not had any sudden pay increases in the last 10 years it is highly likely that the 'salary' that will be used to work out your pension is the oldest ones you are allowed to count...and if you are still paying into the pension these are 10 years ago from today.

    (However it sounds like you 'opted-out' of the pension so it will be 10 years from when you opted out...so you will need your revalued salaries back 10 years from the date of your last pension contribution)
    If you were to opt-back in now that 10 year window could jump. This is important because your pension will be your years of service multiplied by that salary figure and divided by 80 (so about a quarter of your salary). If you were to opt back in then the salary used will (probably) drop and you won't have many more days service to increase it (none actually as you opted-out, so only those worked from now on). This could, perversely, mean that you might get a worse pension if you opt back in for a short period of time! (Hence the advice - find an expert!)

    Beware of the 'increase' you are seeing as that may just be the inflation increase that is applied each year and again could be hiding the fact that your actual pension is worse off. If you are talking about the actuarial reduction that kicks in for taking it early the maths isn't too hard to work out, though personal tax situations can have a major impact but overall I worked out, for my wife who went at 55, that she'd be into her 80s before she was financially 'better-off' for waiting until 60 for the pension.
     
    Startedin82 and Lara mfl 05 like this.
  3. Lara mfl 05

    Lara mfl 05 Star commenter

    diddydave makes valuable points about needing expert financial advice, as yes those best years during those last 10 years and when they were, can have huge impacts on your future pension.
     
    Startedin82 likes this.
  4. HS65

    HS65 New commenter

    Thanks both ...... more to consider than I first thought then ;)

    diddydave - Not sure if I'm considered as opted out. I was just made redundant and have been doing supply since. I was assuming that the ideal situation would be to get back in a permanent post and pay in for another 5 years, although I've enjoyed my time on supply so far and may well continue. Of course, that will mean I wont be paying in anymore ...... so what is in my pension wont grow.


    I guess some expert advice is needed ....... does anyone know if I need to speak to a financial adviser ith specific xperience of TPS or with a regular adviser do?

    Thanks.
     
    Lara mfl 05 likes this.
  5. Dunteachin

    Dunteachin Star commenter

    I was made redundant at 55 and decided to take my Teacher's Pension. Yes, there was a fair reduction for doing so, but remember that you'll be getting an extra 5 years of pension, index linked. I worked out that I'd be in my 70s before I started to lose out.

    I then topped it up for 5 years by doing supply.

    No regrets.
     
  6. Dunteachin

    Dunteachin Star commenter

    I advised myself.:)
     
  7. HS65

    HS65 New commenter

    Yes ...... In my rough calculatiuons that what I found. Obviously that was assuming I wouldn't pay back in again. I calculated what I'd receive up until 70 .... and then 80. And without sounding morbid, there is the question of whether I'll make 80 ;)
     
    Startedin82 likes this.
  8. Dorsetdreams

    Dorsetdreams Occasional commenter

    HS65, I think that your situation is straightforward. You are not paying into your pension so the complicated 'best three in 10' issues are fixed for you and just don't need to be considered as part of the decision on when to claim. Nor do you need to worry about future inflation: your pension will be adjusted to account for inflation over the intervening period whenever you do take it.

    For every year you hold off claiming, your pension income, when you do take it, will be 4% higher (which is NOT the same as saying that your pension pot will be 4% larger - there is no pension pot!).

    As Dunteachin has noted, you will be better off for many years if you do take your pension at 55. I'm reluctant to give advice but I will certainly take AAB as soon as I stop. If I had savings to live on for a year or two I might reconsider, but I'd probably come to the same conclusion.

    (sorry, this crossed with your last post, which makes it quite clear that you understand the situation perfectly well)
     
    Startedin82 and Lara mfl 05 like this.
  9. HS65

    HS65 New commenter

    Thanks ....... I'm certainly leaning towards taking it. My main issue is that I've only got 20 years and 200 days and it doesnt look great on that basis. Another 5 years of paying in would be good, but I dont necessarily see myself getting back into a permanent job .... and if I did, I'm not sure it would be at the same salary point (I ended up on UPS3).
     
  10. phatsals

    phatsals Occasional commenter

    You could take your pension ARB at 55 then if/when you are reemployed on contract you can pay into the new career average scheme, building that one up. That way you have all bases covered.
     
    Dorsetdreams likes this.
  11. HS65

    HS65 New commenter

    Good point ..... the case in favour is building ;)
     
  12. diddydave

    diddydave Occasional commenter

    The problem is the concept of 'paying-in' as it doesn't directly correlate to how much you get out.

    The maths is fairly simple. (Forgive me if I round the 200 days to 1/2 a year to make it easier). And assuming your best salaries are those longest ago (once adjusted for inflation) and that you are a protected member who is entirely in the final salary scheme.

    Option 1 - Remain opted out
    Pension = Average salary from 2008,2009,2010 multiplied by 20.5 divided by 80.

    Option 2 - Get a post and do full-time for 5 years (ending in August 2024)
    Pension = Average salary from 2014,2015,2016 multiplied by 25.5 divided by 80.

    Option 3 - Get a 0.5 part time post for 5 years (ending in August 2024)
    Pension = Average salary from 2014,2015,2016 multiplied by 23 divided by 80.

    As you can see the salary point that you go back in at makes no difference to the pension as your best 3-in-10 are the ones from 10, 9 and 8 years ago. What does make a difference is the number of years service and the 'average salary' figure.

    *Other options do exist....
     
  13. Lara mfl 05

    Lara mfl 05 Star commenter

    Just a point, if you were to gain another teaching position that would be under the 'new system' Things changed in 2007/9(?) and there is no longer a lump sum or the 1/80th based on your final salary's best years. I know this because I have one new and one old TPS. If you left pre that date it would be considered that you'd rejoined under the 'new system' so wouldn't affect calculations on the 'old system'.
     
    Startedin82 likes this.
  14. HS65

    HS65 New commenter

    Than again all ... the ball is rolling slowly. I've requested the 10 year adjusted salary info from TPS and have a meeting with someone from Wesleyan scheduled. Most of what I've seen written about them seems positive.
     
  15. Startedin82

    Startedin82 Established commenter

    Don't forget that Wesleyan will sell "Wesleyan" products which are not necessarily market leaders. Don't feel obliged to take any financial products from them - shop around.
     
  16. Startedin82

    Startedin82 Established commenter

    With 20 years 200 days in and taking at 55 you will have a decent pension (compared to many) but not fantastic. The key question is could you live on the amount? Or will you have other income streams?
     
  17. HS65

    HS65 New commenter

    Yes,I'd read that ..... but also that the "sell" isnt high pressure.
     
    Startedin82 likes this.
  18. HS65

    HS65 New commenter

    Well, I think I'd work until 60 doing supply (or anything else that took my fancy) when my mortgage is paid off. Maybe a bit after too.
    I also own a flat thats currently let out ..... part mortgage until 67 so will need to be paid off. The value of it exceeds the mortgage by a good chunk so could sell and pay off, ideally l'd pay off earler though.
    Then at 67 state pension comes in to the equation.
     
    Startedin82 and FrankWolley like this.
  19. FrankWolley

    FrankWolley Star commenter


    And remember you should get a state pension before you start losing out because you took your TPS pension early (66 for me, born 1956)...
     
    Dorsetdreams and Startedin82 like this.
  20. HS65

    HS65 New commenter

    Really? I wasn’t aware of that.
     

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