AVC's into Teacher's Pension? 32yr olld.

fimonkey

Hi,

Just a general question about the feasibility of the following.

I am 32, I joined the final salary Teacher's Pension in Jan this year, previously to that I had no other pension.

I currently pay £164p.m into the scheme, but I can actually afford to pay more, perhaps up it to £200 p.m. I want this to make up for the previous years I had no pension. Can this be done? Is this the same as AVC's? And can I add whatever figure I propose as additonal, or is ther a formula to work this out?

ANything else I should consider?

Is the TPS pretty 'safe' or not?

Thanks all in advance.

jem16

fimonkey wrote: »

Hi,

Just a general question about the feasibility of the following.

I am 32, I joined the final salary Teacher's Pension in Jan this year, previously to that I had no other pension.

I currently pay £164p.m into the scheme, but I can actually afford to pay more, perhaps up it to £200 p.m. I want this to make up for the previous years I had no pension. Can this be done?

You used to be able to purchase added years. Now you can only purchase additional pension in multiples of £250 up to £5000. It would be index-linked in the same way as you pension.

Is this the same as AVC's?

No. AVCs are stockmarket based and bought through the Prudential.

And can I add whatever figure I propose as additonal, or is ther a formula to work this out?

http://www.teacherspensions.co.uk/members/members_plan.htm#anchor3

Is the TPS pretty 'safe' or not?

It's government backed so yes very safe.

fimonkey

Wow, thanks for the quick reply!

So accoridng to the link, I can pay 'additional' at different times in multiples of £250.

Given I currently pay £164pm, to make this upto £250 pm would require an extra £86pm.

1. How long would I need to pay this for to achieve maximum contribution (i.e as if I'd been paying into the scheme since I was 18/21 years)>

Is it better for me to put this extra into this TPS or save it elsewhere (but no 'invest').

Would it cost my employer extra if I boosted my contribution to £250?

Is it worth doing, and as an alternative could I just boost by £250 for 6 months a year (or is it better I pull in my belt to make as much additional contributions as I can whilst I'm still younger)?


I don't have a 'partner' as such, my next of kin is my sister. Would she receive 'partner' benefits (ie money if I die etc) or should I name my bf as a 'partner'?

How does the partner status affect my additional contributions please? (sorry I didn;t understand what the link was saying)

Hope i'm makin sense!

Many thanks

Fi

jem16

fimonkey wrote: »

Wow, thanks for the quick reply!

So accoridng to the link, I can pay 'additional' at different times in multiples of £250.

Given I currently pay £164pm, to make this upto £250 pm would require an extra £86pm.

The multiples of £250 is not the contribution - it's the amount of extra pension that you buy. For example to buy £250 of extra pension will cost you an extra £16.50 per month for 20 years.

Use the calculator to work it out.
http://www.teacherspensions.co.uk/resources/calculators.htm#anchor5

1. How long would I need to pay this for to achieve maximum contribution (i.e as if I'd been paying into the scheme since I was 18/21 years)

Are you on the new 60ths scheme where NRD is 65? If so you are currently 32 and will be able to pay into the pension for 33 years. Maximum used to be 40 years - not sure what it is now. You would need to work out how much pension you have lost.

Is it better for me to put this extra into this TPS or save it elsewhere (but no 'invest').

Depends on how much you want in retirement.

Would it cost my employer extra if I boosted my contribution to £250?

Your employer will not contribute any more than they do already.

Is it worth doing, and as an alternative could I just boost by £250 for 6 months a year (or is it better I pull in my belt to make as much additional contributions as I can whilst I'm still younger)?

For me it wasn't a good choice but then I'm older and nearer retirement. I am buying added years already. For others it will be a good idea.

I don't have a 'partner' as such, my next of kin is my sister. Would she receive 'partner' benefits (ie money if I die etc) or should I name my bf as a 'partner'?

You can elect who you like.

How does the partner status affect my additional contributions please? (sorry I didn;t understand what the link was saying)

It would cost more to buy additional pension if you included partner benefits.

fimonkey

Wow thanks again Jem, I can see i was confused by the £250 apect,

This all seems a little complicated for me, is it something I can really work out (being a dunce at maths) or should I pay an advisor?

If I 'buy £250 worth of pension for myself at £16.50 per year, is it really worth it considering my age?

What 'benefit' do I get now paying what I do, and how much would this beenfit increase by paying £250 per year or more?

Ah edited to say I've maanged to open the spreadsheet, but it confuses me greatly. If I want to add£250 oension beenfit over 4 years, I pay an extra £39 per month. What does that give me in return as opposed to paying an extra £80 pm over 2 years, or £20 oper month over 8 years?

cheers

jem16

fimonkey wrote: »

Ah edited to say I've maanged to open the spreadsheet, but it confuses me greatly. If I want to add£250 oension beenfit over 4 years, I pay an extra £39 per month. What does that give me in return as opposed to paying an extra £80 pm over 2 years, or £20 oper month over 8 years?

cheers

Use the calculator to see what, if any, other options are available for the amount you want to put away. You can vary the number of years and see what pension it would allow you to buy.

As to whether it's worth it, I couldn't answer that question. You would need to see an IFA. Does your teaching union have an IFA that would answer pension questions - they often do.