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
    • Alice Holt
    • By Alice Holt 6th Dec 17, 7:22 PM
    • 1,589Posts
    • 1,687Thanks
    Alice Holt
    Teachers Pension Scheme - Deferment after 60
    • #1
    • 6th Dec 17, 7:22 PM
    Teachers Pension Scheme - Deferment after 60 6th Dec 17 at 7:22 PM
    A 64 year old friend has a TPS pension (payable from age 60) which he has not yet taken.
    He is currently a member of the University Superannuation Scheme, and intends to continue working past SPA.

    He thinks in the tax year when he decides to take his TPS pension (some £6k), this will trigger a back payment of the previous years pension outstanding (some £25k). This, in combination with his salary, would take him well into the 40% tax band.

    He has asked me for advice (personal finance is not his strong point and he can be rather vague about details).
    I have suggested he contacts TPS to see:
    1) If he can take the annual pension, but defer the back payment of the previous years pension to a future tax year;
    2) If there is an option to increase future payments of the TPS annual pension, rather than take a lump sum back payment;
    3) If TPS offer any flexible options.

    It occurred to me, that they may be some experts on this forum familiar with the TPS who might know the answers, or may be able to offer some helpful suggestions.

    Many Thanks.
Page 1
    • xylophone
    • By xylophone 6th Dec 17, 8:20 PM
    • 23,695 Posts
    • 13,810 Thanks
    xylophone
    • #2
    • 6th Dec 17, 8:20 PM
    • #2
    • 6th Dec 17, 8:20 PM
    He is a deferred member of the Final Salary Section? TPS have produced a Guide for Deferred Members


    Deferred Member:
    Your guide
    to your pension
    July 2017



    Once you reach your Normal Pension Age (NPA)
    and provided you are out of service you should
    claim your benefits. If you continue in pensionable
    service after you reach your Normal Pension Age
    your benefits will be paid from the last day of
    pensionable service. If you delay making your
    claim then your benefits will be backdated to your
    last day of service or when you reached your NPA,
    whichever is the later. Any backdated payments will
    be paid as a lump sum and will be subject to tax.
    • xylophone
    • By xylophone 6th Dec 17, 8:25 PM
    • 23,695 Posts
    • 13,810 Thanks
    xylophone
    • #3
    • 6th Dec 17, 8:25 PM
    • #3
    • 6th Dec 17, 8:25 PM
    Poster jem16 is very familiar with TPS.

    http://forums.moneysavingexpert.com/member.php?u=52024
    • jem16
    • By jem16 7th Dec 17, 9:29 AM
    • 18,584 Posts
    • 11,407 Thanks
    jem16
    • #4
    • 7th Dec 17, 9:29 AM
    • #4
    • 7th Dec 17, 9:29 AM
    He thinks in the tax year when he decides to take his TPS pension (some £6k), this will trigger a back payment of the previous years pension outstanding (some £25k). This, in combination with his salary, would take him well into the 40% tax band.
    Originally posted by Alice Holt
    That is the normal situation. He would have been far better taking it when it was due at age 60.

    He has asked me for advice (personal finance is not his strong point and he can be rather vague about details).
    I have suggested he contacts TPS to see:
    1) If he can take the annual pension, but defer the back payment of the previous years pension to a future tax year;
    2) If there is an option to increase future payments of the TPS annual pension, rather than take a lump sum back payment;
    3) If TPS offer any flexible options.
    It would certainly be in his best interests to contact the TPS but Iím pretty sure 2 and 3 are not options. 1 would be unlikely as taking the pension would trigger the lump sum.
    • mgdavid
    • By mgdavid 7th Dec 17, 11:43 AM
    • 5,281 Posts
    • 4,466 Thanks
    mgdavid
    • #5
    • 7th Dec 17, 11:43 AM
    • #5
    • 7th Dec 17, 11:43 AM
    That is the normal situation. He would have been far better taking it when it was due at age 60.



    It would certainly be in his best interests to contact the TPS but Iím pretty sure 2 and 3 are not options. 1 would be unlikely as taking the pension would trigger the lump sum.
    Originally posted by jem16
    maybe he should open a SIPP or other private pension and put the payments in there, thus regaining any tax paid?
    A salary slave no more.....
    • Alice Holt
    • By Alice Holt 7th Dec 17, 2:54 PM
    • 1,589 Posts
    • 1,687 Thanks
    Alice Holt
    • #6
    • 7th Dec 17, 2:54 PM
    • #6
    • 7th Dec 17, 2:54 PM
    That is the normal situation. He would have been far better taking it when it was due at age 60.

    It would certainly be in his best interests to contact the TPS but Iím pretty sure 2 and 3 are not options. 1 would be unlikely as taking the pension would trigger the lump sum.
    Originally posted by jem16
    Thanks for this information.

    That was my thought. He could have recycled it annually into a SIPP / AVC and built up a fund to help towards any additional care costs required in later years.

    I'm not sure putting a £20-25k lump sum into a SIPP without financial advice, given today's markets, is entirely recommendable for someone with limited knowledge of personal finance ( and who holds no S & S investments.), even though it would reduce the taxation take.

    I wouldn't often suggest the services of an IFA, but I think it may be worthwhile here, as in addition to the TFLS and backdated pension due, he also has cash savings which have been earning little (or no) interest.
    Last edited by Alice Holt; 07-12-2017 at 2:56 PM.
    • xylophone
    • By xylophone 7th Dec 17, 6:06 PM
    • 23,695 Posts
    • 13,810 Thanks
    xylophone
    • #7
    • 7th Dec 17, 6:06 PM
    • #7
    • 7th Dec 17, 6:06 PM
    He may find this helpful.

    https://directory.moneyadviceservice.org.uk/en
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

3,834Posts Today

8,561Users online

Martin's Twitter