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NQT starting in Sep. Should I opt out of pension scheme?

Discussion in 'Pay and conditions' started by writemejen, Aug 6, 2008.

  1. Speaking to an existing teacher at my school she tells me to expect around £100 of my salary to go towards my pension. I have just turned 22, and my sister tells me I'm far to young to have to realistically think about this right now, and that I should opt out and save myself some money each month. But there must be implications to this yes? If she's right when is the right time to start paying in? Also, if I start paying now, and continue to do so, how much can I expect to retire on? I really don't understand how the whole system works at all. Can anyone point me in the direction of some good advice? I no doubt sound incredibly naive and silly, so apologies in advance.
     
  2. Speaking to an existing teacher at my school she tells me to expect around £100 of my salary to go towards my pension. I have just turned 22, and my sister tells me I'm far to young to have to realistically think about this right now, and that I should opt out and save myself some money each month. But there must be implications to this yes? If she's right when is the right time to start paying in? Also, if I start paying now, and continue to do so, how much can I expect to retire on? I really don't understand how the whole system works at all. Can anyone point me in the direction of some good advice? I no doubt sound incredibly naive and silly, so apologies in advance.
     
  3. Don't opt out!
    One of the biggest perks of being a teacher is that we get a good pension to pay into. If we worked in the private sector, we'd be on our own. To get a full teachers' pension, you have to pay in for 'x' number of years. obviously, if you don't fulfill all that, you will not be entitled to a full pension (and remember, you may want to take maternity leave at some point/have a career break, in which case you will miss payments). My advise? Get in and stay in!!
    Look on the union websites for more info
     
  4. do not even think about opting out

    your sister is talking through her proverbial

    not only will it have an effect on the level of your final pension but you will save less of your salary than you think

    you will have to pay higher NI contributions, and any saving after that will be taxed (unlike the pension contribution) but even worse you will lose out on the employers contribution (which is more than yours)
     
  5. trinity0097

    trinity0097 New commenter

    There is no way you should EVER opt out of the TPA IMHO!

    What you get out depends on what you put in, so start paying to get the max benefits for you.

    Your sister obviously doesn't realise how the teacher pension is organised, in that it's not contribution (money) based but service based (although you have to pay in to get that service).
     
  6. gmf

    gmf

    In my experience of families one sibling can often - sometimes secretly- dislike another. This may be what your sister is doing here because if you listen to her you will make a huge error...
     
  7. phatsals

    phatsals Occasional commenter

    You can't opt out unless it is part time, it would also be an extremely foolish thing to do as your employer pays double your contribution into your pension.
     
  8. jubilee

    jubilee Star commenter

    It would be ahuge, huge mistake to Opt Out.

    You get a full pension after building up 40 years in the scheme. Not all teachers work the 40 years so opting out might reduce your total pension service even more.

    You pay 6.4% in pension contributions and as your pay will rise every year (on the scale as well as the inflation rise) your early years in teaching will cost less than later years to gain one year in the pension.

    The pension deduction is made BEFORE tax and NI are deducted and thus reduces the amount of those taxes each month. If you Opt Out, you pay 11% (?) NI and 20% tax on the £100 that would have been squirrelled away in your pension.

    If you find that teaching is not for you and you leave before accumulating 2 years in the pension, you can withdraw the contributions and pay the extra taxes at that point on your refund.

    If you go into another job, you can leave a 2yr+ teachers pension where it is to produce a reduced retirement pension or, if your new career has a compatible scheme and you are likely to end up on a higher salary than in teaching, you can transfer any teacher's pension into the new scheme in the first year of belonging to the new scheme.
     
  9. hi just a quick question if you op out - can you opt back in again?
     
  10. emilystrange

    emilystrange Star commenter

    unless your sister is a qualified financial adviser and has seriously done her homework on your financial situation, she should not be advising you at all.
    mind you, technically speaking, neither should the rest of us here, but would you rather lose out on pension, the worth of which is likely to be far more than you yourself pay in, or get the benefits?

    this final salary scheme is one of the best around, and one of a dying breed. SHOULD the govt ever decide to change it to a defined contribution one, and you're not already in, you'll probably have lost more benefit.
     
  11. Don't opt out that will be a really really big mistake. You will loose a lot of money as the employer is paying in more than you will be. Anyone who advises you otherwise is very very wrong. Your short term gain will be very small compared to your future benefits. think of it as saving with someone else putting in money for you as well. Believe it or not we all get old and the time flies until then. You will then realise that you want as much pension as possible to enjoy yourself.
     
  12. jubilee

    jubilee Star commenter

    You can Opt back in after Opting Out.

    If you later decide to try and build up your pension, you would be paying an increased percentage of a higher teaching wage so getting the equivalent of the missing year/s would be costlier.

    Under the old TPS you used to be able to buy added years but these were costed based on your age and the point you were on the payscale. The older you were, the more it cost. Th higher on the payscale, the more it cost. You had to fund the employee and the employer portion. I think they have adifferent scheme for increasing your pension entitlement now but it will be similarly expensive.

    The best way to manage on your NQT salary is to make an undertaking at the start of your career that you will NOT spend your money on resources for the classroom , nor will you buy prizes for the children. If the school expect the children to get rewards for completing work, THEY should provide the incentives.

    I have come across so many teachers (in the 9 years that I have been qualified) who talk about the poor pay and then shell out on all sorts of things for their lessons. I even had a HOD who bought all the A level literature texts for MFL (usually 7-10 pupils each year) on the basis that the departmental budget never stretched that far. She'd been doing it for 20 years; no wonder her budget was never revised upwards!

    The pupils are so used to getting things off their teachers that they express surprise or outrage when you do not comply wth the precedent. When I tell pupils that I do not have pens and pencils to hand out to them (Secondary), they tell me to buy the cheap ones from Tesco. "Buy them yourself instead" is my usual reply.

    I once asked pupils what their parents did for a living. To those who had office worker parents, I asked if they took in stationery or printer ink for their employer/clients. They were horrified at the suggestion; why should an office work spend their wages on work stuff?
     
  13. To the OP, it depends on your circumstances. If you know that the job you have is permanent, then your sister is talking out of her backside because what you would 'save' now is what you'll miss out on when you're old. E.g. A lot of current OAPs don't put on their heating during winter because the payments are so high. If your sister wants that kind of future for herself, that's ok, but if that's not what you want, disregard her advice and stick with your teacher's pension.

    However, I opted out of the teacher's pension for my current job because I was on a part-time short-term contract as A-level Psychology teacher in a school 6th form until August and was uncertain whether I would find a permanent position in another school (as my PGCE is in FE so I don't have QTS) or go back to FE, or even if I'd have a permanent job at all! I've now found a full-time permanent (once I get QTS) job in another school 6th form, so will be paying into the teacher's pension again. I will also speak to HR regarding making up for the payments that I didn't make in my current job.

    By the way, you're not being naive and silly because you're questioning your sister's advice. To have followed it unquestioningly would have been naive and silly I agree, as we won't have a pension like the current OAPs when it's our turn, so what does your sister think we'll live on if we don't have private pensions? Air, maybe?

    Hope this helps!
     
  14. Btw, just to clarify my current contract ran from January to August. Hence, my decision to opt out.
     
  15. My financial advisor looked horrified when I talked to her about people opting out. She said there was NOTHING on the market to beat the teachers' pension. The civil service used to be comparable or better but most of those departments are privatised now. Do NOT opt out. Even though I will only have 17 years at retirement I am still better off paying in. I can't afford AVCs but if you are young stay in.
     
  16. classwhisperer

    You can make up for the pension loss by purchasing additional pension through TP. But you will find that it will cost you around 6-7 times more than it would have cost by not opting out. Employers dont make any contribution towards the additional pension.

    TP gives an example of a 55 year old teacher, who would have to pay £9300 to buy £500 of extra pension. A teacher on £40000 at retirement gets £500 pension for each years contribution.
     
  17. tafkam

    tafkam Occasional commenter

    Whenever I see threads with titles like this, I want to rush in and shout NO!
    Fortunately, 17 people got there before me.
    I'm pleased to see that the value of the pension scheme is now so widely recognised.
     

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