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TPS viability in current form?

Discussion in 'Retirement' started by letap, Apr 25, 2019.

  1. letap

    letap Occasional commenter

    Personally, I fear for the viability of the TPS in the current form primarily due to the ability of schools to pay the additional employer contribution in Sept 2019 ( although the extra payment has been defered for an extra year for state schools). With this in mind an alternative provision may have to be made. Personal circumstance dictates that I will have to apply for a new job in the next couple of years. I am wandering if I would be better off coming out of the TPS and potentially negotiating the possibility of an employer contribution to a SIPP. I am a transition member and I am fairly certain my best 3 in 10 will not come from any future employment.
    Additionally, the CARE scheme as it stands is good - if you wanting to retire at 67, however, I am fairly certain that I want to be retiring much earlier. Would welcome any thoughts - especially if anybody has managed to get an employer to contribute to anything other than the TPS.
  2. harsh-but-fair

    harsh-but-fair Star commenter

    I noticed.
  3. diddydave

    diddydave Occasional commenter

    I was persuaded to opt-out in my early years - very naive back then...luckily for me it was a case of mis-selling and when I went through the figures I was reinstated and the company had to pay to put me back in the TPS with those missing years.

    I wouldn't opt-out of either scheme and I couldn't find anything that matches the newer CARE scheme when I did look, though it was a few years ago.

    I very nearly posted a new thread on this subject this morning too as I can see there is possibly a small section of the workforce who would benefit from being able to opt-out of the TPS if they could persuade their employers to put some of that 23.6% that they would have to pay TPS into a different scheme. Whether it would be worth the extra admin overheads to employers would probably be a sticking point. However if schools could offer two schemes, the TPS and another into which they pay a significant, but less than 23.6%, amount they they could, possibly, also save money.

    As a transition member I'm also aware that the firefighter and judge's case could very well lead to our pensions being altered somewhat - though there is the assurance that they will not be worse than the current transition plans - so I wouldn't jump.

    My own CARE amount is so small that it makes little difference in taking it early but you can bear in mind that if you don't take the pension early (i.e. at 60 and not before) then you can leave it whilst you live off the final salary portion and take it at 67. That was my initial plan so I put a lot of extra into the AVCs with the view of using them to bridge the gap between 55 and 60.
    letap likes this.
  4. Dorsetdreams

    Dorsetdreams Occasional commenter

    I know that feeling! You didn't say your age, so the relevance of this isn't clear.

    I wouldn't worry about the viability of the scheme - it isn't as if the money is really being invested. But you would take on that worry if you could go your own way. And I doubt that you would ever get an employer to contribute at all.
    border_walker, Startedin82 and letap like this.
  5. Dorsetdreams

    Dorsetdreams Occasional commenter

    I've done some sums based on my service in order to compare final salary to career average.

    My 29 years in final salary have earned me £609 pension per year each, if taken at 55. (i.e. reduction factor .79 applied)

    My last year of Career Average has added £645, again if taken at 55. (reduction factor .6 applied)

    This ignores the fact that the FS pension also gives a lump sum. But I care about long term income.

    What's my conclusion? I won't let the 0.6 reduction factor on the career average pension stop me going early.

    [Others' figures could be very different. My 'career progression' was sedate, and static in the last decade.]
    letap likes this.
  6. applecrumblebumble

    applecrumblebumble Lead commenter

    Part of the problem has been too many people retiring early because they have found the job unsustainable for various reasons. These people would have been paying in sizeable amounts of money (because of their experience, seniority) into the pension scheme.

    If you think employers are going to pay into a SIPP, they’re not. If given the opportunity to opt out of the TPS, they will so that will be paying 5% with you paying 8%. Every teacher should be fighting to keep the TPS and if employers have to pay 23.6% so be it, the government will have to fund this anyway.
  7. diddydave

    diddydave Occasional commenter

    ...and I'd never advocate giving up the TPS but given that there are a few staff for whom it may be advantageous* I don't see why a savvy bursar might not look at a cheaper (for them) and better (for those few staff) option to run as an alternative to the TPS - giving staff the option of which to join (if they are allowed to offer different schemes).

    *Those who have received proper advice and who are in that small minority where the additional service in the CARE scheme is not outweighing the lower best 3-in-10 salary that is used for their final salary portion of the pension.
    Startedin82 and letap like this.
  8. diddydave

    diddydave Occasional commenter

    This is the part that I feel is most pernicious as it looks as though it's not a question of making the schools accountable but a way to squeeze the funding further. Wages after all are the biggest overhead in schools and although the government can 'fully fund' it I don't see them rushing to point out that in their sound bites of "we're giving schools more money than ever before" when that increase in wage costs wasn't part of the historical comparison.
    Startedin82 and letap like this.
  9. letap

    letap Occasional commenter

    Excellent points made here. As it stands the TPS is very much a boon for a serving teacher. A teacher on £28500 currently would add £500 a year to their pension - using a conversative pension valuation, this is effectively adding £10000 to their pension pot. It is in our best interests that we fight to retain the TPS. As pointed out, a high proportion of older/experienced teachers have left in the recent past - leaving a cohort of teachers who are younger - who are less likely to value or even understand the benefits of the TPS. From 2020, once the government removes its payment of the extra pension contribution, I can only see schools re-addressing the budget deficit by either cutting staff numbers/ getting rid of "expensive" staff/forcing teachers of the TPS.

    In my own personal circumstance, I will have to look for another job within two years and then see what the lie of the land is.
    Prim and eljefeb90 like this.
  10. Dorsetdreams

    Dorsetdreams Occasional commenter

    That has always been the case. Many young teachers 'sold' their pensions back in the mid 80's despite all the advice from unions and older colleagues not to (but were, I think, compensated and allowed back into the scheme later).

    I think that the removal of the 1.6% accrual after a gap of 5 years and the 67 and rising payment date make the current scheme rather 'cheap' for the government, in a profession staffed by younger, short-serving teachers.
    Startedin82 and eljefeb90 like this.
  11. eljefeb90

    eljefeb90 Senior commenter

    You get the impression that those of us who spent our whole career in teaching are something of a dying breed..quite literally.
  12. diddydave

    diddydave Occasional commenter

    Sadly true, it was the regularity of notices of ex-colleagues dying that persuaded both of us to go as early as possible.

    I lost a department member two weeks before retirement, we had a supply teacher in front of my classes the very next day so I could look after his and the favourite saying of another teacher who died within months of retiring was never so poignant...one from Charles de Gaulle I believe..."Graveyards are full of indispensable people".
    eljefeb90, Prim and PeterQuint like this.
  13. fariduddin

    fariduddin New commenter

    Its so easy to get immersed in work, not take a break, trying to keep up, finding it hard to step back etc. Reality is that once we are not there, everyone / the organisation moves on.
    Easy to say but important to build in time for self, loved ones and build resilience for later life.
    Our profession is tough but we can feel good that our pensions are reasonable at present. I really worry about the recent news in the media of ideas being discussed to reduce benefits and safeguards for retirees to support younger generation. It's a case of robbing Peter to pay Paul.
  14. binaryhex

    binaryhex Lead commenter

    Who'd be a teacher now? This is just the start ......


    And where are the Unions as this tsunami approaches? They should be organising walkouts and strikes immediately, to nip this in the bud before it gains any wider traction. But they won't. They're probably still in Barbados on holiday, or the BMW showroom in the UK, or in the BMW showroom in Barbados.
    paulstevenjones and Prim like this.
  15. Prim

    Prim Occasional commenter

    I absolutely agree, where are the unions, the whole education system has been brought to its knees, an erosion of everything and the greatest shame is the impact this has all had on the quality of education for our children :(
    paulstevenjones likes this.
  16. phlogiston

    phlogiston Star commenter

    While your school remains in TPS, stick with it - because you won't get better than that. If the school is forced to leave TPS some time in the future, then is the time to think about options. No harm in contingency plans though, and getting proper pension advice - possibly union, possibly paid pension adviser who knows about TPS.
    I can't help feeling that there are politicians who would publicly regret, but privately celebrate if teachers' pensions were destroyed.
  17. PeterQuint

    PeterQuint Lead commenter

    Given the current recruitment crisis, it’d be a stupid idea.

    The attractions of teaching were always said to be good hours, good holidays, job security and decent pension.

    Now we have excessive workload lengthening the day and shortening the holidays, and capability/redundancy threatening the job.

    Take away the pension and I can’t think why anyone would want to be a teacher.
    eljefeb90, catmother and Prim like this.
  18. paulstevenjones

    paulstevenjones New commenter

    Agree with the above. If the TPS is threatened then surely even the most supine of us will rise up and protest.
    eljefeb90 likes this.
  19. paulstjohn2014

    paulstjohn2014 Occasional commenter

    To be honest I think the scheme is ok for a while yet. I think it works be political suicide to make many changes in he current climate.
    eljefeb90 likes this.
  20. Jamvic

    Jamvic Senior commenter

    Cassandra says....;)

    Private schools will dump the expensive TPS first, then larger MAT’s, followed by smaller MAT’s, will be allowed to make independent decisions to opt out collectively for all their schools. The scheme will then be deemed to be ‘unviable’ for State schools and their participation will be changed from mandatory to ‘Headteacher’s discretion’. Then the scheme will die out completely as HT’s rush to dump it to improve their school finances. New entrants to the profession will pay into the government’s Workplace Pension at whatever the going rates are at that point in time.

    No one, including the unions, will listen until it’s too late as that is the nature of the curse. :(

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