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May I have some guidance from you good folk please?

Discussion in 'Retirement' started by Seffie, Feb 1, 2020.

  1. Seffie

    Seffie New commenter

    i am 61, came to teaching late. I currently have 21 years service, if I took my pension now I would have £11000 according to my pension statement online. I’m in final salary and will receive full state pension at 66.

    I have had a fairly recent promotion to LT 4 ( nearly a year ago). Which I would keep, I have been told I can remain as a member of SLT.

    My Head teacher is keen for me not to retire ( couldn’t afford to anyway) but has said he would be happy for me to reduce days/phased retirement.

    I love my job and school, i’m not ready to retire yet, but I really would like to drop a day in September.

    I’ve read all through your helpful posts and still can’t get my head around what to do for the best. Ideally I would like to fully retire at 64 but then I need to fill the gap until my state pension kicks in.

    Should I just drop a day and take my pension at 64 or take phased retirement? For example, drop one day this September, then another next year ...........

    I am worried about the effect on my final pension!

    Thank you, all and any suggestions would be very welcome indeed.

    Ps I don’t have a mortgage and own my own home.
  2. lynneseptember

    lynneseptember Senior commenter

    Hi Seffie,
    Have you sought the advice of a financial advisor? If you are in a union, then it is likely that your union will endorse one, for example, NASUWT endorse Wesleyan, who I found helpful a few years ago. I didn't do phased retirement though, so can't advise you on that, I'm afraid, though a colleague took phased retirement after advice from them and I believe things worked out well.
    I'm sure someone will be along soon who may be able to offer you some advice from their own experience.
    install, Lara mfl 05 and Morninglover like this.
  3. Sundaytrekker

    Sundaytrekker Star commenter

    Yes, union advisors should be able to give you several different examples of phased retirement.

    If you like your current role, and it sounds as though you do, and if your head is happy for you to drop a day, and it sounds as if they are, then this could be a good course of action. I think the issue is whether you want to access some of your pension with the drop in days to make up your income or whether you just drop the day and leave your pension alone till 64. Maybe think about how much income you need now as if you take a large amount of your pension benefits as well as still working most of the week you might pay more higher rate tax, for example, than if you don’t take it all.

    I’d suggest ringing TPS and asking as many specific questions as you can. They won’t advise which is best but can explain how different scenarios would work.
  4. Brianthedog

    Brianthedog Occasional commenter

    Without sounding rude, if you I have no mortgage to pay, and are earning enough to be on SLT with an £11k possible pension, then dropping a day or two shouldn't impact you that much?
    I dropped 1 day and my salary reduced by about £250 a month. I then dropped another when I got my pension. I also stopped paying pension contributions. My salary dropped again, but my tax increased. I saved my salary and lived on my pension only before I fully retired. That way, I knew I could afford not to work any more. My pension isn't much more than yours because I took the max lump sum too.
  5. Seffie

    Seffie New commenter

    Lynneseptember, thank you, I will look in to that. Sundaytecker, yes, that is exactly my dilemma. I have read a few posts saying that I should take my pension ASAP, but I am concerned about the tax and would like to continue to add to my pension now I am earning more than I ever have! But I just don’t know if that is the right thing to do?

    Brianthedog, that is exactly what I needed to hear, re the drop in days, tax etc. I do love my job and my head is very supportive, but I really would like a long weekend!

    So, when I get to two/ three days off is phased the way to go?
  6. Morninglover

    Morninglover Lead commenter

    Whilst I agree with those who say, if your HT will allow you to drop a day a week then this is a great opportunity, can I just say you shouldn't worry about tax on your pension: I retired early and took the max lump sum and NO tax was paid on that. On my monthly pension (and yours!) you will pay the basic rate on all above the tax free amount (so 20% on £11,501+ - or not very much!)
    semolina29 likes this.
  7. wayside34

    wayside34 New commenter

    Seffie, It is my understanding to take your teachers pension you have resign for at least on day. As for paying back into the teachers pension I was told in my letter about my pension ( or as T.P call it benefits! I was in final salary NPA 60 ) any further service I did if I was to return to teaching I would be enrolled in the Career average scheme as 'Additional Service After Retirement' (ASAR). As you are 61 you would be subject to earning limits you need to contact Teachers pension to get your ' point of reference' ( how much you may earn without abatement being applied ). I would politely advise contact Teachers pension.

    As for tax you will pay tax over the personal allowance of £12,500 p.a. on the Teachers pension you would not pay National insurance. On your future earning with your continuing employment at your school you would pay tax and N.I. Again I would contact HMRC to gain reassurance. The document below is quite good

  8. Sundaytrekker

    Sundaytrekker Star commenter

    You don’t have to resign for a day to take phased retirement. That’s exactly why it was designed to allow reduction in working hours and taking part of your pension, if you wish, without giving up your contractual role.
  9. wayside34

    wayside34 New commenter

    Thanks Sundaytrekker I didn't know you did not have to resign. I have learnt something today....
    Lara mfl 05 likes this.
  10. Seffie

    Seffie New commenter

    Thank you for your guidance, it is much appreciated. I have decided to do one more year, full time, and then start phased retirement.

    All the best
  11. Seffie

    Seffie New commenter

    So having made up my mind about Phased retirement, I went off to recheck my statement online! I find that my pension will be calculated using Method A &B and I’m on Restricted salary because I had a Salary rise of 10% I don’t really understand what this means but it doesn’t sound good to me! There was I thinking that taking on this huge amount of responsibility (and work load) in SLT that my pension would benefit, but if I read it right, this isn’t the case? Can someone explain please?

    Thanks in advance.
  12. Morninglover

    Morninglover Lead commenter

    I'm afraid I don't understand this either.

    You need expert advice which means more than anyone can provide here. Maybe speak in the first instance to your Union?
    Seffie likes this.
  13. diddydave

    diddydave Established commenter

    It's not bad, just not quite as good as you may have hoped.
    If, in the last 3 years, your salary is increased by more than 10% then for the purpose of your 'final salary' calculation the final salary may not be your current final salary. To get the benefit of the SLT salary you would need to work more than 3 years at that level.

    However, the restriction isn't totally draconian. The final salary they will use is the better of either 10% above your previous salary or £6,136 above your previous salary. https://www.teacherspensions.co.uk/members/resources/forms/updates.aspx

    So if your previous salary was £40,000 then, despite 10% only making that up to £44,000, you would be allowed to have a salary of £46,136 used in the calculation.

    This fixed amount is better for anyone whose salary now is less than £67,496...so only if you are earning more than that now will any restriction actually have any impact.
    install and Seffie like this.
  14. diddydave

    diddydave Established commenter

    One other thing to look a though is whether your pension is worked out using Method A OR Method B...they do use both methods and you get the best one...but you cannot get the pension from A AND B. If it turns out that your pension is worked out from B and that the best 3 years you have do not include the current years then yes, taking on the extra workload may not be giving you any benefit. You would probably need to get specialist expert advice as there may be some nuances to how the calculations are performed. For instance I don't know if the 10% rise is taken above your previous years salary or if it is above the average one used for method B, which includes inflation increases. Many teachers best 3-in-10 is from 10 years ago and that salary figure is generally 10% above what they are currently earning (if they had no promotions in the last 10 years).

    One other thing to look at is whether you have ever had a break in service as that can lead to another calculation which again may be better than either the method A or B ones. (The Hypothetical Calculation). This calculation isn't shown on the TPS website and I have heard that they are reluctant to tell you what it would come to as it depends on whether your final salary is more than when it was at the break in service.
    install and Seffie like this.
  15. Seffie

    Seffie New commenter

    Diddydave, thank you so very much. Please excuse if two posts pop up. I replied a couple of days ago but it hasn’t appeared.

    no break in service.

    so if I work just over another two years, which I intended anyway, will I revert to the best three years in ten? That will then be just over three years since my 10% increase or will it never go back?

    I have now decided not to do phased retirement, not sure what advantage it gives me. I don’t really need the extra income as luckily have no mortgage now. Surely it is better to leave the pension well alone until I either drop two days or retire?

    ive worked out how much I would lose if I drop a day in September, it’s just under £400 a month ( I used an online calculator that worked out decrease in tax etc). But, just how much will this effect my pension, I don’t know how to work it out. Pension currently sits at just over £11000, if I do another few years would rise to just over £13000 according to calculators, but that’s doing full time.

    I really would like to drop a day, I love my job but I would like to get back some ‘me’ time!

    would dropping one day have a huge impact on my final figure?

    thanks in advance
  16. diddydave

    diddydave Established commenter

    If you work just over another 2 years then your higher salary will be used in your pension calculation, the restriction only applies for those who get a sudden increase for 3 years or less. This was to address the, perceived, issue of schools giving someone an undeserved pay boost in their final year in order to get them a better pension. If you work for more than 3 years at that level it will be either your last 12 months salary or the best 3-in-10 which is probably going to be the last 3 years (2019-2022).

    The effect on your pension is complicated by the changes that have to be made but that have not yet been sorted out due to the legal challenge. The online calculators only use the current rules and these are the ones that have GOT to change. The good news though is that if you go part-time the salary figure used in the calculation for the Final Salary scheme, which I believe you will be treated as being on, is the Full-Time Equivalent salary - in which case it will have no major effect on your pension. Going down to 4 days a week will add 0.8 of a year to your service but if it allows you to work at the higher FTE salary for more than 3 years it should give your pension a boost.
  17. Seffie

    Seffie New commenter

    Thank you for your time. Plan now is to carry on working full time until I’m out of the three year trap! The higher 3 in 10 figure, according to calculations is worth it to my pension.

    You have really helped, thank you.

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