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Pension query

Discussion in 'Retirement' started by chem1984, Aug 2, 2019.

  1. chem1984

    chem1984 New commenter

    I've just completed my NQT year having come in to teaching at 34 and I'm trying to optimise my final pension. I've completed a PhD and worked a few years in research - I'm in the process of transferring in 3 years of my university pension into the teachers scheme but appart from that I haven't paid into any other pension. What are peoples opinion about making up the difference? Should I consider buying in to the teacher's pension? If so when?
     
  2. phatsals

    phatsals Occasional commenter

    You are being really sensible transferring your university pension in, it has to be done within the first 12 months of employment or that's it.

    Don't worry about optimising your pension just yet, see what transfer in value you get first. It does make sense to pay for additional pension or faster accrual in the early years when lower down the scale, as it costs less. Having said that, there is no time limit so take a look on the TPS website and see what you prefer. You're only young and I'm sure you have a lot of other drains on your income, keep it all in balance.
     
    emerald52 likes this.
  3. emerald52

    emerald52 Star commenter

    I transferred my LA pension in when I started teaching. Excellent decision.
     
  4. diddydave

    diddydave Occasional commenter

    As ever with a significant financial decision I'd suggest you get professional advice rather than rely too heavily on 'chit-chat' from us non-experts, however I'll offer the following advice on what I would be doing:

    1) Before transferring into the TPS I'd check what benefits I'd gained from the university pension and comparing those to the TPS bearing in mind the following potential negative and positive points:
    Negative
    a) The TPS scheme is in an uncertain state due to the court case
    b) The TPS scheme is on the governments 'radar' (along with all public service pensions) as being 'too expensive'
    c) There is no 'cash-value' that you can access early (compared to a private pension or AVC)
    Positive
    a) The TPS scheme accrues a set figure each year that is increased by inflation PLUS 1.6%
    b) There are options within it to improve it : https://www.teacherspensions.co.uk/members/working-life/paying-in/increasing-your-pension.aspx
    c) If it is 'too expensive' for the government it's probably very good value (or at least better than the alternatives) for teachers!
    Neutral
    a) Rules may be changed in the future

    2) I'd be looking at when I think I'd like to retire, there was no way I was going to get to 60 let alone 67 or 68 - but of course you are much younger and have a far greater life expectancy than myself ;) !

    3) To be able to use the pension flexibilities to get hold of money after 55 I'd be looking at :
    a) Private pension/AVC/SIPPs that can be taken separately to the TPS
    b) Alternative investments - buying property and becoming a landlord (looking back over my lifetime I can see that the value of the houses I've lived in has increased in the region of 20% of my salary per year)

    Finally with 30+ years to go before you can take your pension you ARE in a good place to start planning, although we didn't realise it at the time our decision to start an AVC paying in 10% of my salary from the age of 28 has meant that we could 'retire' before 55 - and it is a good position to be in.
     
  5. mustntgrumble

    mustntgrumble New commenter

    I'm assuming you're USS. What I learnt over the last 5 years out of 32 years working.
    1] Everyone who kept their years in USS over 25 years ago now regrets it. USS is less stable than TPS. Half of us transferred the other half didn't. I am in the happier half who did transfer.
    2] Avoid AVCs. The markets been very slow over the last 20 years. By the time the fund managers have taken their cut there's little left
    3] Additional years in TPS once you get into higher rate of tax are good value. Currently. If you have money left over from mortgage kids etc. Buying a few here and there is a way of spreading risk. Probably safer than bonds.
    4] property letting was a good gig to be in around 1995. I know ppl who made money from it and it served them well. I didn't :(. Informed opinion seems to be avoid this now. Neither party likes landlords. Unless you have a big portfolio it is very risky and can be hard work.
    5] I made money over the years from stock market (I started in 1982 and knew how to exploit the late 1990s boom) Poker and the Internet over the years.. In addition to teaching. I don't recommend any of these now. The point is to be alert but intelligent about opportunities. I certainly have no clue about where the next one is coming from.
    Although I envy your youth I do not envy some of your prospects over the coming decades. Good luck.
     
    Prim likes this.

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