Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • poiuytrewq10
    • By poiuytrewq10 18th Apr 17, 3:55 PM
    • 18Posts
    • 6Thanks
    poiuytrewq10
    Increasing Teacher Pension or getting a SIPP
    • #1
    • 18th Apr 17, 3:55 PM
    Increasing Teacher Pension or getting a SIPP 18th Apr 17 at 3:55 PM
    I've been thinking recently about putting some additional money into my pension but I'm unsure what the best route is. I've been weighing up various choices but would like anyone to point out any flaws in my thinking, anything I might have missed or share ideas about any decisions people have made in this area before.

    I'm not, before anyone thinks I am, talking about no longer contributing to my teacher pension!

    A bit about me first:
    I turn 30 next month.
    I've been teaching for 4 years.
    Other than a mortgage, I have no debts other than a few CC used for stoozing which could be paid off whenever.
    I have a S&S ISA which I contribute to each year but don't max out the contributions (not on a teacher's salary!)
    Not married, but my GF is also a teacher.

    My initial thinking is to get a SIPP. Reasons for this are that it gives me control in what and when I invest in and more flexibility in when I choose to take the pension. I'd be able to invest either once a year in a lump sum, or monthly depending on my financial situation and could simply not pay in if there was change in my financial situation.

    If I choose to use one of the Teacher Pension methods of increasing my benefits I see potential issues with each.

    Buying Additional pension is okay but the amount I receive will be reduced if I retire early and the idea of retiring at 68 in the classroom does not appeal!

    Faster accrual seems appealing in that it is taken directly from my salary but needs to be sorted each year and can't be adjusted within a year (and you never know when you might regret having that extra money being taken).

    An AVC seems to be similar to a SIPP but seems to have much higher fees than the platform I'd choose to use.

    If any additional contributions made into my teacher pension were also matched by my employer, I'd definitely add them to that, but that isn't the case.

    If anyone is thinking that I haven't considered a LISA, I'm probably going to get one at some point but not place the maximum amount in for various reasons.


    Thanks in advance.
Page 1
    • stoozie1
    • By stoozie1 18th Apr 17, 7:42 PM
    • 238 Posts
    • 89 Thanks
    stoozie1
    • #2
    • 18th Apr 17, 7:42 PM
    • #2
    • 18th Apr 17, 7:42 PM
    I thought you could use your additional pension payments to find the earlier retirement (by allowing that to be the buffer which your annual pension is reduced by, preserving the benefits you would have accrued anyway)?
    • poiuytrewq10
    • By poiuytrewq10 18th Apr 17, 11:18 PM
    • 18 Posts
    • 6 Thanks
    poiuytrewq10
    • #3
    • 18th Apr 17, 11:18 PM
    • #3
    • 18th Apr 17, 11:18 PM
    If you take a 'phased retirement ' you can defer when you take the additional pension. If you take both your pension and additional pension early, both will be reduced but I guess you could look at the additional pension as offsetting some of the reduction in your initial pension.
    • MatthewAinsworth
    • By MatthewAinsworth 18th Apr 17, 11:25 PM
    • 2,699 Posts
    • 1,083 Thanks
    MatthewAinsworth
    • #4
    • 18th Apr 17, 11:25 PM
    • #4
    • 18th Apr 17, 11:25 PM
    Build up the s&s enough and potentially retire before 57 if you really go for growth...

    Lisa pointless when you can have a sipp and aren't crossing tax thresholds
    • MatthewAinsworth
    • By MatthewAinsworth 18th Apr 17, 11:31 PM
    • 2,699 Posts
    • 1,083 Thanks
    MatthewAinsworth
    • #5
    • 18th Apr 17, 11:31 PM
    • #5
    • 18th Apr 17, 11:31 PM
    Actually if you have a child one day you may be able to use extra sipp contributions to increase your tax credits/universal credit, perhaps keep it in an ISA till then
    • zagubov
    • By zagubov 19th Apr 17, 12:12 AM
    • 14,493 Posts
    • 124,658 Thanks
    zagubov
    • #6
    • 19th Apr 17, 12:12 AM
    • #6
    • 19th Apr 17, 12:12 AM
    Be wary of AVCs, I definitely found them to be very expensive.
    There is no honour to be had in not knowing a thing that can be known - Danny Baker
    • chiefie
    • By chiefie 19th Apr 17, 6:21 AM
    • 285 Posts
    • 294 Thanks
    chiefie
    • #7
    • 19th Apr 17, 6:21 AM
    • #7
    • 19th Apr 17, 6:21 AM
    If you are not yet 30 I would expect pension age for you will continue to rise. Quite rightly if this is not appealing you have time to do something about it, but you will only be able to take the sipp 10 years before Normal pension age. And between then and now the government can change that. George Osborne bless his little cotton socks bought pension freedoms in as he knew it would increase the tax take. I would invest in a s&s isa until/of you reach the 40% tax bracket when it would be tax efficient to invest further into a pension. But that's just my take �� I do think though that teaching is one of the areas where AI will impact the number of jobs in the next 20 years. Good luck on your journey
    • AlanP
    • By AlanP 19th Apr 17, 8:23 AM
    • 806 Posts
    • 554 Thanks
    AlanP
    • #8
    • 19th Apr 17, 8:23 AM
    • #8
    • 19th Apr 17, 8:23 AM
    Can the AVC pot be taken tax free as part of the Pension Commencement Lump Sum calculation as it can with the LGPS scheme?

    Great from a tax point of view but does link the AVC to the main TPS scheme so reduced flexibility.

    Not sure why earlier poster said LISA is pointless as it looks like quite a good deal to me, particularly while you are not a HR taxpayer.
    • poiuytrewq10
    • By poiuytrewq10 19th Apr 17, 9:38 AM
    • 18 Posts
    • 6 Thanks
    poiuytrewq10
    • #9
    • 19th Apr 17, 9:38 AM
    • #9
    • 19th Apr 17, 9:38 AM
    I do think though that teaching is one of the areas where AI will impact the number of jobs in the next 20 years
    Originally posted by chiefie
    Interesting you say that. I personally think that, especially in primary education where I work, AI will be more of an aid than a replacement of teachers. It's more likely TA jobs will be affected by that. Ultimately I don't think parents would want their children looked after by only AI.

    My opinion on the LISA is that it is another different vehicle in which you can save for your retirement. Having multiple options for retirement which allow access at different ages can't be a bad thing? Getting £250 for saving £1000 is a pretty good return too - this will hopefully see decent returns in a S&S LISA.

    The point about waiting until I'm a higher rate tax payer makes sense and hopefully progressing through to a deputy, assistant or head role will help see that happen.

    I'm definitely staying clear of AVCs as I think there is better value for money elsewhere.
    • MatthewAinsworth
    • By MatthewAinsworth 19th Apr 17, 11:09 AM
    • 2,699 Posts
    • 1,083 Thanks
    MatthewAinsworth
    The Lisa 25% is no better than the top up you get putting into a pension, even when you are on basic rate, and if you get the tax credits/universal credit, it's an even better time than when you are a higher rate taxpayer.

    In fact pensions are much quicker (3months) at giving you your tax rebate than a Lisa (1year), which could cost you growth, and lisas are inaccessible to you till age 60, inferior to a sipp at 57

    The Lisa is currently a completely inferior product imho, but laws can change so it may be worth having £100 in one before you're 40 incase they get good all of a sudden

    Hypothetically, a regular ISA making say 12% in small cap and/or leveraged property would only need £100k to grow approx £1000 a month, and you could draw that, and that could be much sooner than 57, but obviously it would be far,far, far from reliable.
    • Ray Singh-Blue
    • By Ray Singh-Blue 19th Apr 17, 2:41 PM
    • 317 Posts
    • 409 Thanks
    Ray Singh-Blue
    Through the 20th century, global life expectancy rose by 3 months per year. A baby girl born today in France or Japan has a better than 40% chance of living to 105.

    I just read this in a book called "The 100 Year Life". Along with lots of other interesting points, it predicts that developed economies may need to trim existing pension benefits in one way or another in order to balance the books- a prediction often made elsewhere.

    I do not keep all eggs in one basket. But "a rope with three strands is not easily broken" and maybe your three strands are teachers pension, SIPP and ISA..

    For years I have been paying into an occupational pension scheme (not teacher) alongside a SIPP and ISA. I hope this will give some flexibilty around retirement, however goalposts change over the second half of my life and beyond. At present I see the ISAs funding a period of work-lite, the SIPP early reitrement and the occupational pension full retirement, but this is a loose vision, the key thing is the element of flexibility

    .
    • MatthewAinsworth
    • By MatthewAinsworth 19th Apr 17, 5:49 PM
    • 2,699 Posts
    • 1,083 Thanks
    MatthewAinsworth
    Also all the talk of having to cut pension benefits isn't relevant if you aren't DB and don't buy an annuity, as long as your pension grows as fast as you draw it
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,664Posts Today

7,442Users online

Martin's Twitter
  • Byebye! I'm about to stop work & twitter, to instead spend glorious time with Mrs & mini MSE. Wishing u a lovely summer. See u in 10 days.

  • WARNING Did you start Uni in or after 2012? The interest's rising to 6.1%; yet it doesnt work like you think. See https://t.co/IQ8f0Vyetu RT

  • RT @JanaBeee: @MartinSLewis Boris is the anomaly (coffee), the others are versions of normal (beer). Lots of same candidates = vote share d?

  • Follow Martin