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Pension mess up - advice please.

Discussion in 'Pay and conditions' started by Lizzie13, Apr 9, 2012.

  1. Hi there,
    I am looking for a little advice regarding my pension if anyone can help.
    I started teaching in 2005 & opted out of the pension scheme. When I moved authorities (Sheffield to Bradford) in 2006 the school I started working for opted me back in (which was fine by me), so I have paid contributions since then (4.5 years worth now as I had 1 yr out for supply). Following a conversation with my new authority (Nottingham since Sept 2011) it appears I have been making the contributions but they haven't actually gone into my pension!!!
    This now leaves me with 2 options - either pay the money in & my pension carries on as normal, or have the money back as a lump sum & then opt into my pension from now on.
    If I do the second option I can pay off my debts or put down a house deposit which is an investment for the future in itself. However I'm wondering how much this option would effect my final pension - will it make a huge difference?
    What would you guys do?
    Thanks in advance xx
     
  2. phatsals

    phatsals Occasional commenter

    I'm sorry but this isn't very clear. Are you saying the entire 4 years contributions are missing, or is it since 2011?
    If you have been making contributions then they should be credited, likewise the employer element. Is it that the new LEA have not updated your current service?

     
  3. Yes, all 4 years. They aren't missing as the money has been located - I've paid it, it just hasn't gone into my pension. I can now have it put into my pension if I want, or have the money back as a lump sum.
     
  4. This seems to be happening to a lot of people. I have a year missing and I'm going to ring payroll tomorrow to try and sort it out. I've asked TES to investigate it as it has happened to a large number of people that I've spoken to on here and that I work with. I would advise you to get it added to your pension, as otherwise you will have to pay tax on it and you will miss out on your employer contributions as well.
     
  5. phatsals

    phatsals Occasional commenter

    Then what you will have returned are your contributions less tax. What you will sacrifice is 4.5 yrs service along with employer contribution, this will not be returned to you. I don't know where you are on the payscale but this could be a couple of thousand pounds a year, index linked. If this service was before the 2007 changes it is a pension that currently can be claimed at 60, if you leave now and rejoin it will be under the less favourable post 2007 (pension age 65) changes.
    Your employer will have to pay up their contribution and pay it to TPS. It may seem a long way off but you are talking 5 years difference plus, at current rates, about £2K a year. To put it another way it would cost approx £4k to buy £250 worth of annual pension,- over £30,000 to buy back. You would get back barely a fraction of this if you ask for its return. The real winner would be your past employer.

     
  6. jubilee

    jubilee Star commenter

    Without any doubt, have the contributions credited to your pension!
    You have been making contributions since 2006 so are in the Old TPS. the New TPS started on 1st Jan 2007.
    The old TPS is better! You can draw your full pension entitlement at 60yrs instead of 65yrs.
    You geta guaranteed lump sum. In the New TPS you have to trade part of your annual paneion if you want a lump sum on retirement (as most people do to pay off mortgages, fund a special holiday etc)
    If you take the contributions back, you will (as stated by others) be taxed on all the money and be charged the extra NI that you would have paid in 2006, 2007, 2008 etc had you not been int he pension . Those in the pension pay a lower (2% lower), Contracted out NI on all their pay over about £400 per month.
    Your contributions are safe and if transferred to TPS will get the employer top-up to make qualifying years.
    If you want to make up the 'lost years' later , after cashing in your contributions, you have to fund it all (no employer top-up).
    You already have 4.5 years of the 40 needed for a full pension (1.5 times salary lump sum and half salary per year in pension).
    If you settle for the New TPS and want to retire at 60, you will have to take a 20% reduction of pension benefits, as against no reduction if you keep your valuable Old TPS membership.
    If you want to retire at age 58, you'd take a 29% reduction from the New TPS and only an 8% reduction from the Old TPS.
    Seriously, it's a no-brainer! Get the payments sent to the TPS as they should have been years ago.
     
  7. jubilee

    jubilee Star commenter

    Also ... you have currently bought pension years at their cheapest ever rate, from your early teaching salary. A year of 6.4% of M1 salary buys the same year in the pension as 6.4% of UPS3 or Leadership scale salary.
    The LA will be holding its breath, waiting for you to ask for a refund, as that will save them the 13% Employer contribution.
     

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