1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.
  2. Hi Guest, welcome to the TES Community!

    Connect with like-minded professionals and have your say on the issues that matter to you.

    Don't forget to look at the how to guide.

    Dismiss Notice

Pension opt out

Discussion in 'Pay and conditions' started by doneill55, Dec 7, 2011.

  1. Hi all. Just after a bit of advice. I have spoken with a rep from the TPS who had not got much advice to give me and there is very little online. I have decided to opt out of the teachers pension scheme. Before people start telling me that I'm mad and that the pension is fantastic- I want to state that I am already aware of this but due to personal reasons I do not want to pay into a scheme just yet.
    I am starting a job in Jan and want to know what the implications of not paying into a pension will be regarding my take home pay. I have heard that I will need to make more NI contributions but nobody can confirm this. I will be starting on M2 and would like to know roughly what my take home pay will be so I don't get a massive shock in Jan.
    Help much appreciated.
    Thanks
     
  2. Hi all. Just after a bit of advice. I have spoken with a rep from the TPS who had not got much advice to give me and there is very little online. I have decided to opt out of the teachers pension scheme. Before people start telling me that I'm mad and that the pension is fantastic- I want to state that I am already aware of this but due to personal reasons I do not want to pay into a scheme just yet.
    I am starting a job in Jan and want to know what the implications of not paying into a pension will be regarding my take home pay. I have heard that I will need to make more NI contributions but nobody can confirm this. I will be starting on M2 and would like to know roughly what my take home pay will be so I don't get a massive shock in Jan.
    Help much appreciated.
    Thanks
     
  3. coppull

    coppull New commenter

    Good afternoon.
    Yes you are quite correct that you will pay more N.I. and you will also pay extra tax. One of the Forum regulars,who write in great detail on this question will come along and give you full details.
    TPS cannot give you advice,only a financial advisor can undertake that job.
    A brief reminder that pensions are not just about what you receive ,when retire.They also provide a pension if f you are unable to continue in teaching because of ill health or die in service.This is very important if you have a wife ,husband ,partner or children.The Pension scheme provides for them if you die in service or even after retirement.
     
  4. I believe if you use the TES FAQ pay calculator (just google TES FAQ and it will come up) it will work it out for you.
    To give you an idea of difference in pay (I opted out last month as we are emigrating in a couple of months and won't be returning to the UK ever, and as I've only got about £2k in there anyway, two more months contributions didn't seem to make a huge amount of difference to the amount I will transfer out into my pension fund over there) I was getting £1761.17 now I get £1860.85 a month (M6, rest of UK scale). Can't tell you my NI contributions etc and how that has changed as its a right hassle to get hold of payslips, but might give you an idea of how much (or not) you can expect to have in your paypacket.
     
  5. Thanks for responses. Pixie the calculator has cleared everything up for me! Only a difference of £78 a month!!
    Thanks again :)
     
  6. pwc9000

    pwc9000 New commenter

    Which for your sake I hope means you will change your mind!
     
  7. I am fully aware of the benefits of a pension and how worthwhile they are. As I stated above- I do not require one. Not everyones circumstances are the same.
     
  8. jubilee

    jubilee Star commenter

    You've already worked out how much extra you'll have in your take-home pay but to put the deductions in context (pension versus no pension) ...
    Paying into the pension gives you tax relief. If you are a 20% taxpayer, you don't pay tax on the gross pay used to fund your pension. For every £100 put into the pension, you save paying £20 in income tax.
    When in the pension you are Contracted-Out of the State second pension and so the government charge you less National Insurance because you and your employer are funding an occupational pension.
    National Insurance is chargeable on any weekly earnings over about £95 and monthly earnings over about £400. When in the TPS and thus contracted Out of the State 2nd pension you pay about 10.4% NI on earnings over the monthly NI free allowance.
    If Opted out of the TPS, you pay about 12% NI on all earnings over the NI-free element.
    So, Opting out means extra tax and NI but increased take-home pay overall.
     
  9. jubilee

    jubilee Star commenter

    Anyone paying higher rate tax (40%) should think extra carefully before Opting Out of the TPS. They'd not lose 40% of their superannuation payments in extra Income Tax and pay extra NI on a greater amount of earnings but might also lose Child benefit.
    Paying into the pension keeps some people out of the Higher Tax bracket and thus saves them tax as well as meaning that the pension benefits have cost them less.
     
  10. Really good point about the higher tax rate Jubilee. Pity I have a while to go to reach that :(
     
  11. pwc9000

    pwc9000 New commenter

    Indeed. And very few of those millions of circumstances lead to not contributing to the TPS being the right decision. But perhaps you are one of those few.
     
  12. I am indeed PCW!!
     
  13. Or pwc* even [​IMG]
     

Share This Page