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Teachers Pension - UK

Discussion in 'Teaching abroad' started by Darthteacher, Jul 5, 2016.

  1. Darthteacher

    Darthteacher New commenter

    I posted a thread on here recently that had some outstanding advice for me, so thank you VERY much to everyone that contributed to the debate. :)

    My new question: I'm teaching abroad, yet I return each year to stay with my parents, they are getting older and so I like to spend 6-8 weeks with them. While I am back in the UK I usually offer my services for some supply work, one school in particular uses me. I've notice that part of my payment is to the Teachers Pension Scheme - I found this very interesting. Thus, the big question is: When I return back abroad can I STILL make my own contributions to the Teachers Pension? I would like to do this if at all possible. Thank you so much for any positive responses received. :)
  2. Alldone

    Alldone Senior commenter

    I would go to the Teachers Pension web site and phone one of their advisers - they are very good. I doubt that you could contribute to the TP whilst working abroad, otherwise wouldn't everyone who works abroad be doing the same?
    Darthteacher likes this.
  3. Wotton

    Wotton Lead commenter

    As far as I know you can only contribute while working for a school in the uk. Even teachers working through supply agencies in the uk can not pay into the teacher's pension.
    Darthteacher likes this.
  4. wanet

    wanet Star commenter

    You can buy added years. Is that what you mean?
  5. Darthteacher

    Darthteacher New commenter

    so I can add to my pension? If I have a few years in. I can add to it, in a lump sum type of deal?
  6. the hippo

    the hippo Lead commenter Community helper

    My understanding is that you can indeed re-join the Teachers Pension Scheme, once you are back in the UK and also teaching in the UK. This is precisely what I did. As regular readers of the pachyderm's ramblings will know, Mrs. Hippopotamus and I were in Kenya, Saudi Arabia and then Egypt. After that we went back to the UK for two years (big mistake) and then went abroad to Romania, the UAE, Qatar and now China. During the two years we were back in the UK, I did make two more years of pension contributions. If I had had lots of spare cash, then I could have also bought some extra years. The bad news, of course, is these extra years are very expensive indeed and you have no guarantee that you will be alive to see the benefit from them!
  7. Darthteacher

    Darthteacher New commenter

    Yes, I'd like to make up on lost time
  8. the hippo

    the hippo Lead commenter Community helper

    Well, Darthteacher, I am not sure that buying up some additional years really is making up for "lost time". I am not a pensions expert or an accountant, but perhaps there are a few things that you might need to think about.

    First of all, it is no longer the case that you can contribute to your teacher's pension if you are not living and teaching in the UK. (This used to be the case, but the rules have changed.) Therefore you need to get a teaching job in the UK if you want to pay for some years when you did not make your teacher's pension contributions.

    Secondly, pension contributions are normally made up of two components: your own contribution, deducted directly from your salary, and your employer's contribution. Therefore if you want to "buy back" some passed years' contributions, then you will have to pay your component AND your employer's component as well. Therefore this is going to be VERY expensive.

    Thirdly, your teacher's pension will, of course, be paid in sterling. If the UK pound continues to go down in value, compared to other currencies, then this might have a huge impact upon your retirement plans. Although this might not have a serious effect if you were to retire in the UK, it might well be quite a serious matter if you were to retire in a country where the local currency has gone up in value compared to the British pound. (One hears stories on the grapevine of Brits who have retired in Spain and France having a real struggle to make ends meet.)

    Fourthly, the time-gap between receiving your teacher's pension and then finally getting your UK state pension may now be bigger. Perhaps this might not really be an issue, if you have already accumulated a large pile of savings and investments, but on the other hand you might struggle to survive for five or six years if you are only receiving your teacher's pension (and that might not be all that much anyway).

    Fifthly, it might be the case that you need to think a lot more about reducing your overall costs after retirement, rather than just focusing on increasing the size of your pension. That is, after all, only one side of the coin. If you retire in the UK, then of course you still have to pay the absurdly inflated prices for everything, such as the rubbishy public transport, even if you are now retired or an OAP. Petrol and parking are not free if you are retired and you still have to pay VAT on just about everything, as well as Council Tax (actually I think that Council Tax might be a bit less if you are really ancient). Electricity and water still cost a small fortune in the UK. Eating out in the UK is expensive and often poor value.

    As for Mr and Mrs Hippopotamus, we have just had our house insulated and we are getting a wood-burning central heating system installed. (Firewood is either very cheap or free in Bulgaria.) The central heating system will also provide loads of hot water. Water and electricity are much cheaper than in the UK and the Bulgarian equivalent of Council Tax works out at about fifteen pounds a year. LPG is common in Bulgaria and it is less than half the price of petrol. Apart from in the capital, Sofia, parking in Bulgaria is usually free. A return train ticket from Dragoman (our nearest town) to Sofia (that is a round trip of about 100km) costs six BGN or two quid.
    Darthteacher likes this.
  9. clovispoint

    clovispoint Occasional commenter

    Hippo, You should start a building a retirement village for wayward teachers. We could all hang out and talk about the good old days. :D
    Lara mfl 05 and Darthteacher like this.
  10. the hippo

    the hippo Lead commenter Community helper

    Hmm. Well, Bulgaria might not suit everyone. Central Spain might be cheapish, if you stay away from the Costas. The Captain seems to like it. Frogland is rather more expensive and you can forget about la Sud (cheers, Mr Mayle). Maybe some parts of Central France might not be too expensive.

    One of the biggest advantages with Bulgaria that property is really cheap, so Mr and Mrs H have a villa in the mountains and an apartment in Veliko Tarnovo, the old capital.
    Darthteacher likes this.
  11. 576

    576 Established commenter

    Things change but when I spoke to them in 2009 you couldn't make conts when working abroad and that would include buying in past added years. I'm not even sure that's still an option. But if you find yourself back in the UK I think they still do AVCs.
    Darthteacher likes this.
  12. Darthteacher

    Darthteacher New commenter

    I usually go back in the summer for two months and work supply, I wonder if I could do it that way?
  13. stopwatch

    stopwatch Lead commenter

    When I moved overseas in 2001 you could indeed still continue paying into your TPS. However:

    1) You had to pay both your contribution and your employers - so it was a fairly hefty sum
    2) You had to opt in within 6 months of moving. I did not find this out until I had been away for a year. In hindsight this wasn't a bad thing

    This option was stopped around 2006.

    You can no longer pay in if you are working overseas. I'm not sure about the situation described ie working supply in the Summer break. I would be concerned how this impacted on your non-resident status and therefore your liability to pay tax on any overseas income - you can't have your cake and eat it.

    I am due to get my UK teachers pension this April (I am still overseas). I enquired about buying in more years/more pension and was quoted that, if I were eligible, it would cost £100,000 to buy an extra £6,000 pension per year. As I will still be overseas I don't believe that this option is open to me anyway now. However, I think £100,000 would be better invested elsewhere - probably property.
    Darthteacher likes this.
  14. fsmc

    fsmc Occasional commenter

    A 6% index linked return would be much better than other investments if you're near retirement. You'll struggle to get a 6% yield on property.

    As said though, this option isn't likely open to most.
    Darthteacher likes this.
  15. Darthteacher

    Darthteacher New commenter

  16. stopwatch

    stopwatch Lead commenter

    Where, at a point near to retirement, could you get an investment that guaranteed 6% return and was index linked?...... and was secure.

    Property rentals typically yield 5-6% as well as the increase in value of the property itself. The one downside with property is that it has to be managed which can sometimes mean constant repairs, chasing rent, finding new tenants, periods where property is not rented.

    Horses for courses I guess.
  17. fsmc

    fsmc Occasional commenter

    Well a 6,000 yearly return on a 100,000 investment is a 6% return - buying additional years in the teachers pension scheme.

    Personally I'd sooner buy shares. No maintenence, property agents or anything else. Can sell them fast if you need money quickly. I also think property prices in the UK are wildly overvalued by around 50%...such a situation cannot last forever where ordinary working people on average salaries cannot afford houses. So I wouldn't count on the prices going up always.
  18. stopwatch

    stopwatch Lead commenter

    Are you referring to my earlier comment whereby an additional £6,000 per year pension would cost me £100,000? If so, this isn't actually a return on my investment in that I would no longer have my £100k. It would only be after more than 16 years I would have recouped the £100k and then started to get any real profit/return.

    I am still not sure where you are suggesting I might get a guaranteed 6% return from an investment. Shares are not reliable enough - along with many so called investments.

    Although house prices may slow down, I doubt very much that they will be allowed to go down drastically over a prolonged period. It would totally mess up a large number of peoples financial situations.
    Helen-Back likes this.
  19. Helen-Back

    Helen-Back Occasional commenter

    I'd rather invest the 100,000 in index funds and take 4% and leave leave what's left for my kids, than throw it in a pension fund at 6% and have nothing for your kids. If you continue paying into NI and have some kind of pension from another source you already have fixed income. I'd rather keep the rest in index funds so my kids get something (we don't own property)
    clovispoint likes this.
  20. fsmc

    fsmc Occasional commenter

    Isn't the teachers pension index linked? After 16 years you'd therefore be making a lot more than 6,000 a year, yes?

    For a comparison annuities run at about 4-5% per year and are not index linked - which makes a massive difference in the long run.

    I'd say shares (more precisely, tracker funds) are just as reliable as rental income from a property. Things like maintenance, property agents and bad tenants mean it's certainly a lot more hassle to own property.

    Most of this discussion is just academic though, since as already noted you cannot pay into the TPS from abroad.
    Darthteacher likes this.

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