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Worth paying back in to pension?

Discussion in 'Retirement' started by HS65, Jan 10, 2020.

  1. HS65

    HS65 New commenter

    I left pensionable employment in 2018 and have been doing supply. I’m looking to take early retirement in the coming months however I’ve just started a supply contract direct with a school and therefore can/will be enrolled back in.
    I’m going to be doing that for less than a year ..... possibly only even a term. From what I’ve seen in documents posted here you need to be paying in for more than a year to receive pension benefits .... less than a year means I’d receive an “annuity”?
    I can’t find anything else about that? Anyone able to explain how it works .... or have experienced it?

    Should I just opt out?

    thanks.
     
  2. diddydave

    diddydave Established commenter

    Everyone's case is so subtlety different that you'll need to go through the numbers carefully, I'm quite happy to help.

    I will assume:
    1) You taught for more two years before this contact
    2) You have not taken any of your pension yet
    What I'm not sure is if you are a protected member (all your benefits in the final salary) or a transition/tapered member (benefits in both schemes)

    If this is the case you will continue to build up benefits in the supply job (you have to have a TOTAL of 2-years worth of contribution to gain benefits but each job does not need to be 2-years in length)...but it may or may not be worth it!

    You have had a break in 2018 so check your benefit statement, your best 3 years in the last 10 will probably be in the period 2008-2011, this is protected now because of the 'hypothetical calculation'...however, if you are only in the 'Final Salary' scheme the extra months you are going to add through this supply job MAY not be counted because, I presume, the salary is less than that shown on your benefit statement for the pension calculation. This is because your 'final salary' as calculated at the break in 2018 is likely to be higher than the salary you are receiving in the supply post. If this is the case then opting-out would be sensible as you gain nothing...HOWEVER...

    If you are in both schemes then your final salary is protected by the break in service and you will be adding to the CARE benefits...HOWEVER...this aspect is not certain because changes have to be made due to the court case, though there is a government 'promise' that you won't be made worse off.
     
  3. cornflake

    cornflake Senior commenter

    I wonder what rate/pay point you are getting for this supply? If you are going to opt out, is it worth negotiating up your rate a bit, as they won't be paying the employer contribution if you opt out?!!
     
  4. HS65

    HS65 New commenter

    Thanks.

    I might have misunderstood point one ... however I’ve paid in just over 20 years worth (plus a missing 7 months I’m struggling to track down), so benefits in both schemes.
    No pension taken.

    the supply salary is actually close to my adjusted final/best salary.


     
  5. HS65

    HS65 New commenter

    The rate is already good, I’d hesitate at generous but it’s exactly the right scale plus an appropriate TLR. Not sure I could squeeze any more

     
  6. diddydave

    diddydave Established commenter

    Point 1 - you have more than 2-years in the scheme so any more you add in through the new employment will be put into your pension.

    As you have not taken any pension you can ignore the 1-year and 'annuity' stuff, that all relates to adding more service AFTER you have taken your pension.

    I would double-check that you have a 'break' in service (other than the missing 7 months) and see if what your method B and C (if shown) is on your benefit statement.

    Your position is slightly tricky in that they may move you fully back onto the Final Salary scheme due to the court case. We won't know how they'll work that out until it happens. I've run several scenarios for colleagues using their actual numbers and for some they are better under the change back to FS and some are not...some would be better opting out and buying additional pension instead.

    I am not qualified as a financial adviser but if you want me to run through your numbers I can. Having an idea of what the different possible options are and what the costs/benefits are should help.

    For instance you are currently paying into the CARE scheme and if the government holds to its promise that no matter what the changes are you won't be worse off that is probably a good one to stay in. If you have a break then your final salary pension is probably already protected as far as possible. If they put you back on FS and your ending salary is lower than your salary at the break then you won't get any credit for the extra time put in...but...taking the promise not to be worse off should alleviate that. I would hazard a guess that choosing to buy Additional Pension may be a better financial choice but it is one that could heavily depend on how much longer you work and how frequently.
     
  7. HS65

    HS65 New commenter

    I’ll pm you ..... thanks.

     
  8. diddydave

    diddydave Established commenter

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