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Lump sum advice

Discussion in 'Retirement' started by EmanuelShadrack, Jul 12, 2019.

  1. EmanuelShadrack

    EmanuelShadrack Star commenter

    Hello All

    This is my first ever posting on this Retirement forum, so be gentle... :D

    I'm actually asking on behalf of a friend of mine. No, it's not me, honest. I said he should register on this site and ask the question himself, but it's not really his cup of tea.

    I confess I've been too lazy to search this forum and dig up the exact answers to these questions.

    My friend is 51, and is currently doing long-term supply. He's been doing that for years now. He has had full-time teaching posts in the past, but for the usual reasons has opted to do supply instead. I'm not sure about this, but I think he would only have contributed to his pension while he had his full-term posts.

    He'd like to take his pension as a lump sum, as soon as he can. He's not exactly in the best of health, and expects to live to about 70. He said he'd be delighted to get to 75. He does have rather a "live for the moment" mentality.

    He rents privately, with his missus. I don't know if that's relevant, but anyway.

    I mentioned to him that he might have to be a bit careful about taking the lump sum, as it could be taxed if it goes beyond some threshold. I'm not in any way an expert, but I think that's what happens, from what I've read on various websites. (The situation doesn't apply to me, so I haven't taken a huge interest in the matter.)

    Is there any advice to give him? Are there any pitfalls he should watch out for?

    Thanks everyone in advance.
  2. diddydave

    diddydave Established commenter

    He SHOULD get a professional's advice as there sounds like he will have a particularly complex case. If ill-health is a factor there may be other enhancements he may be able to claim. Getting answers from us non-experts is no substitute for proper advice...

    That being said, I'd offer the following:
    He cannot access the teacher pension until he is 55.
    The lump sum is tax-free.
    He gets the lump sum based on his pension from the final salary scheme, and as he's 51 he probably has some in both schemes - this is all under review at the moment so there is unlikely to be a definitive answer available at the moment.
    He can convert some of his pension (25%) to get a larger lump sum (12 times what is given up).
    He will take a reduction by taking it early at 55 (if he's NPA is 60 then he will get 83.3%).
  3. FrankWolley

    FrankWolley Star commenter

    Good advice in post #2.
  4. MrMedia

    MrMedia Star commenter

    What bit of the transition membership is under review? I’m aware that the firefighters won a judicial review against the government, but was unaware that the transition pension for teachers was under review.
  5. MrMedia

    MrMedia Star commenter

  6. Sundaytrekker

    Sundaytrekker Star commenter

    If you mean he’s even thinking about selling out his entire teachers pension for a single lump sum then that’s generally considered A Very Bad Idea and needs serious financial advice.

    If he hasn’t yet registered on the teachers pension website to look at his account, check his years of service and calculate his potential pension at, say, age 55 and age 60 then that’s his first step.
    jlishman2158 and EmanuelShadrack like this.
  7. EmanuelShadrack

    EmanuelShadrack Star commenter

    Yes, I think that's exactly what he's thinking of doing. He knows he has to wait till he's 55, but I think that the extent of his "research". His "live for today" mentality comes into play here.
    Thank you. I'll let him know. When I next see him (probably not for a few weeks), I'll ask him how much he's built up.
    He's well enough to work at the moment, and I expect he will be for a few years yet. His health problems aren't directly work-related, although I'm sure I'd be suffering if I was in his position, given some of the school stories he has to tell...
    jlishman2158 likes this.
  8. eljefeb90

    eljefeb90 Senior commenter

    FWIW, the fact he rents privately is a very significant factor in my opinion. Does he want the lump sum as a deposit / supplement for a property purchase? His pension is going to be small and if he has to pay rent out of it as well, I can't see how he'll manage, especially as his state pension won't kick in until he's 67. As usual, there are too many unknowns and too many variables in each particular case and he needs expert advice.
  9. EmanuelShadrack

    EmanuelShadrack Star commenter

    Come to think of it, I should go on the teachers pension website myself, and see what I've built up. It'll be next to nothing I expect, given I didn't pay in for very long.
    emerald52 likes this.
  10. EmanuelShadrack

    EmanuelShadrack Star commenter

    I've never fully understood how people manage with rent once they retire. His rent is actually quite low, as his place is rather grotty, and the landlord is happy with them. He's been there for about 30 years.

    I'm not sure how he'll manage either. I sense he's in denial somewhat, and wants to enjoy the money before his health problems overtake him.

    Me and him are rather different in our outlook on certain things :D
    jlishman2158, eljefeb90 and emerald52 like this.
  11. emerald52

    emerald52 Star commenter

    Not sure it is possible to sell your teachers pension as it is not a pot. unlike private ones. Ours is paid out of government funds. It is one of the best pension schemes going. It is reduced if you take it early but then you get it for longer. TPS website is excellent.
  12. Rott Weiler

    Rott Weiler Star commenter Forum guide

    This TPS page says you can only transfer accrued TPS benefits to another defined benefits (final salary) scheme. Not to a defined contributions (money purchase) scheme or as cash.

  13. EmanuelShadrack

    EmanuelShadrack Star commenter

    I've just registered, and all the rest of it. It's an impressive site - very informative.

    Well my lump sum isn't much, but if I've understood things correctly, my annual pension is more than I was expecting. That's a bonus.
  14. lindenlea

    lindenlea Star commenter

    If his working life has been mainly as a supply he may not have contributed to the TPS. I suppose it depends on the terms of his supply contracts. he should go on the website and find out how much he has got in, or phone them up. Most people find them helpful.
  15. EmanuelShadrack

    EmanuelShadrack Star commenter

    Thank you everyone for your replies, and particularly to @diddydave for his comprehensive comments.

    I'll have to produce an "edited" version of this thread for my friend. He might not appreciate my saying that he's in denial. I don't think he'd mind my saying that the place he rents is grotty though...
  16. catbefriender

    catbefriender Lead commenter

    Don't forget @EmanuelShadrack if he's really poor when he gets to pension age, he will get pension credit and also housing benefit, so he will be covered. Also advise him that he should really register with his local council housing department for a council property which will ensure he has low rent for the rest of his life. Because he is a teacher, he may get a place or be eligible for some part buy/part rent scheme.
    jlishman2158 and border_walker like this.
  17. EmanuelShadrack

    EmanuelShadrack Star commenter

    Aha, thank you for that.
    I didn't fully answer your question eljefeb. He doesn't want the sum for any sort of property purchase. I think he's pretty much abandoned the idea of ever owning a property. It's a shame really - if he'd pulled his finger out 20 odd years ago I think he could have done.

    He does supply teaching but he doesn't enjoy it. I suggest other things he might do, but I think he's rather resigned to his situation. I enjoy listening to him recount some of the events that go on though. They have me in stitches sometimes...
  18. EmanuelShadrack

    EmanuelShadrack Star commenter

    Thank you everyone who contributed above.

    I showed this thread to my friend the other day, and he's signed up on the TPS website, and found out what his benefits were. (The verification email arrived immediately, as it did in my case too. It does say "can take up to 24 hours".)

    He's seriously considering converting some of his pension into the lump sum, and also taking a reduced amount at 55. At least now though he's much better informed.
    catbefriender and jlishman2158 like this.
  19. Master59

    Master59 New commenter

    Officially retired 31/09/19.....received lump sum on 4/09/19...(which was more than projected ....)...but not heard anything about my monthly pension...? I’ve heard it’s paid into your account one day before your birthday...? Which in my case would be the 29th of each month ....but I am expecting a letter explaining this....Anyone else gone through something similar..?
  20. Rott Weiler

    Rott Weiler Star commenter Forum guide

    31/08/19 ?
    Startedin82 likes this.

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