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Opting out of Teacher's Pension? (NQT)

Discussion in 'Personal' started by Lionheart7, May 18, 2020.

  1. Lionheart7

    Lionheart7 New commenter

    Hi guys,

    I have a few questions as I've been offered an NQT position from end June or early July. How does the teacher pension work, as in, what contributions would I be expected to make on an M2/M3 salary? How much will the employer be putting in?

    I opted out when I was working in finance for a couple of reasons. My personal investments were yielding greater returns as well a higher overall return on capital investment.

    Another reason was that I knew a few people that had lost out on their pensions, with some people losing out on £300-500k due to their pension provider going bust. I don't think I would want to stomach such losses, which is why it was better for me to continue funding my own low risk, high capital investments.

    If the teacher pension is contributing to a firm and carrying similar risks, then I feel I should opt out?

    Thank you.
  2. LondonCanary

    LondonCanary Star commenter

    Just Google it.
    catmother and Jamvic like this.
  3. Corvuscorax

    Corvuscorax Star commenter

    Don't ask here, ask the teachers pension.
    Marshall, Laphroig and Jamvic like this.
  4. Jamvic

    Jamvic Star commenter

    Having worked in finance previously I’m sure all the information about the Teachers Pension Scheme on their extensive website will be very easy for you to understand. It’s an extremely comprehensive resource which explains all options available for teachers, whatever stage of their career.

    vannie, Lidnod, catmother and 5 others like this.
  5. WB

    WB Lead commenter

    Few quick things.

    The teacher pension is not what it was but it is still pretty good. You pay in 9% not sure what the em[employer's contribution is but it's free money! The pension is backed by the government so is about as guaranteed as it can be.

    If you opt out now, you may never opt back in as taking a 9% reduction a few years down the line may be too much too bear.

    Your own situation may have an influence on your choice but as a general rule I would strongly advise anybody stay in.

    There is a pension forum on here with people far more knowledgeable than me.


    You may get some great answers to your question with the hour.
  6. border_walker

    border_walker Lead commenter

    A little research will tell you that you don't understand how the teacher pension scheme works. I assume that you research your investments before making them, but don't seem to have done the same for TPS, odd.
  7. Morninglover

    Morninglover Star commenter

    There are few financial questions in life easier to answer than the one 'should I join the Teachers' Pension Scheme or not'.

    If you have worked in finance you should find answering it even easier...
  8. emerald52

    emerald52 Star commenter

    Anyone not in teaching would be thrilled to have the option of joining the TPS. Inflation linked rises and not investment linked. Pensions are paid out of government funds. The TPS website is great and the retirement forum on here very helpful.
    phlogiston, artboyusa, WB and 6 others like this.
  9. peakster

    peakster Star commenter

  10. ilovesooty

    ilovesooty Star commenter

    install, WB, chelsea2 and 4 others like this.
  11. Jesmond12

    Jesmond12 Star commenter

    THIRDED. I opted out for 5 years and I am now much regretting it!
    baitranger, install, WB and 4 others like this.
  12. mothorchid

    mothorchid Star commenter

    In answer to the question...NO, not unless you want to lose out in a major way.
    Many years ago, in the nineties, I opted out for a few years. I had to pay in more money and had no employer contributions either. Then the mis-selling scandal blew up and I was able to opt back in. The very small pension pot I had built up was added to my teachers' pension, and I was given back all the massive amount that had gone on "costs". In the end I was better off, because I had, in fact, paid so much over the odds that I ended up with several thousand in an AVC fund. If I'd left it where it was, in a private pension, I'd have lost out by many tens of thousands, both in how much I was paying in and in how much was due out at the other end.
    Just don't.
  13. Rott Weiler

    Rott Weiler Star commenter Forum guide

    As TPS is paid by the government the risk of the pension provider going bust is as low as it can be (unless you take a particularly pessimistic view of the UK economy post coronavirus and post Brexit :) )

    As TPS is a Defined Benefits Scheme (not a defined contribution one) the investment returns it makes are not relevant. Actually it's an unfunded scheme paid from general taxation so doesn't have an investment fund.

    You'll find details of what it pays you and what the contribution rates are on the TPS website. Note that the employer pays nearly 24% contribution. That is in effect extra pay to you on top of your salary and you lose it if you opt out.

    TPS is one of those index linked public sector pension schemes that some parts of the media keep calling 'gold -plated' because its terms are nowadays much more generous than you'd get in private sector schemes. IMO no-one in their right mind would opt out of it.
    phlogiston, install, WB and 7 others like this.
  14. wayside34

    wayside34 New commenter

    Marshall likes this.
  15. magic surf bus

    magic surf bus Star commenter

    Stick with the teacher's pension and use any spare cash to play the stock market if you wish, then you're covered both ways.
  16. Mangleworzle

    Mangleworzle Star commenter

    It's very simple to opt out of the TPS, it is also a very bad idea to do so.

    There's a good reason you are automatically in.
    steely1, phlogiston, install and 3 others like this.
  17. oldsomeman

    oldsomeman Star commenter

    If you do not stay in the TP scheme you will still have to join another workplace scheme at a far worse rate of return.
    Please don't do this. I did once and have lived to regret it since. I am so grateful i listened to the advice in these foroums years ago.
    steely1, emerald52, install and 2 others like this.
  18. Sundaytrekker

    Sundaytrekker Star commenter

    I agree with everyone. Stay in the scheme. The only comments I take issue with are around ‘ you will lose the 24% employer contributions if you opt out.’ You never see these amounts added in pounds and pence to your calculation. Yes, employers have to pay them but they are best regarded as a fee or tax that the employer must pay to allow you to belong to the scheme and help the government to run it.
    install and catmother like this.
  19. Rott Weiler

    Rott Weiler Star commenter Forum guide

    It's the price the employer has to pay to buy you the TPS pension benefits but if you ask the employer not to buy a TPS pension for you the employer keeps the money and doesn't give it to you to buy something else with.

    That seems to me like a pretty good definition of "you will lose the 24% employer contributions if you opt out"!
    Last edited: May 18, 2020
    phlogiston and emerald52 like this.
  20. burajda

    burajda Star commenter

    I'm just wondering if you are missing your old lifestyle. The Porsche, the restaurants, trips and the 60K a year plus bonus and benefits. That was a lot to give up to become a teacher. I bailed out of a well paid job a few years ago to go into teaching, but I wouldn't have done if I was on your money in my twenties I would have banked it and come in much later.


    The Poll you set up Should I go into teaching? received a 74 - 7 response against. Why did you decide to ignore the advice of the overwhelming majority?

    It all sounds a bit fishy to me, you worked in finance and you don't understand how the TPS pension scheme works, perhaps you're just winding us all up or are a journalist fishing for teachers comments and opinions.
    Last edited: May 18, 2020

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