Should I opt out of teacher's pension?

kimbo790

Hi - I currently pay £180 per month into the teacher's pension scheme - but I have a lot of debt and am wondering whether I would be better off opting out temporarily and using the money I would have paid to help clear my debts. I am 32 and have around 7 years of payments made into the scheme - 9 years with a two year break in the middle. I am also considering leaving the profession anyway within the next couple of years. Any advice gratefully appreciated!!

bendix

No. No. No. NOOOOOOO. Nein. Mais Non.

Nope. Don't do it. Don't be daft. No way jose. Not a chance. Noooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo

Get the message?

kimbo790

OK - I get the picture!!:)

But if I'm to leave teaching in a few months anyway, what's the difference in me not making the last few month's payments before I leave the profession? If it's the case of me getting some extra cash to help to pay of my horrific debts!

dunstonh

Chances are the NET amount you pay into the pension and increased NI you will pay by opting out will mean you are not that much better off each month.

So, £180pm is probably only worth around £130-£140pm. (yet the benefits equate to around £400pm if you were to put a money value on them).

Are your debts that bad that you can afford to throw away such a good scheme? Is leaving a stable profession a good idea if you do have debt problems?

kimbo790

Thanks - unfortunately my needing to leave teaching is due to health reasons. I am resigned to the fact that I will need to find myself a far less stressful job asap!
And yes, my debts total around £20,000 and I am concerned about the financial implications of me needing to leave teaching, given that my finances are so bad - hence the request for advice on whether opting out of my pension was a good idea to help me on this way to clearing the debt given my circumstances. I figure that with less debts, leaving the stable profession of teaching will be less stressful!
All the advice greatly appreciated - thanks

Loughton_Monkey

Phew!

I'm no expert, but personally I have been in stressful jobs for at least the last 14 years of my 34 years in work. I worked out ways of dealing with it as best I could, but it spurred me on to save even better (expecially in pensions because of the huge tax efficiency) with the ultimate aim of..... yes.... a stress free retirement. And I have achieved it.

Had I 'opted out' earlier, then with hindsight, I can guarantee that I would be even more stressful now (and at age 56 when I retired). To me, work was stress, but it paid the bills and 'bought' me total stress relief in the form of decent savings. Best medicine I have ever had.

seven-day-weekend

bendix wrote: »

No. No. No. NOOOOOOO. Nein. Mais Non.

Nope. Don't do it. Don't be daft. No way jose. Not a chance. Noooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo

Get the message?

No? .
..... .

Loughton_Monkey

seven-day-weekend wrote: »

No? .
..... .

I think he means "..looking at the facts, by and large, and weighing all matters up, bearing in mind the pros and cons, I come down, perhaps, a little bit in favour, all other things being equal, in the fullness of time, of tending to argue that to transfer could well be slightly against your better interests from a financial point of view. Probably."

purch

I will need to find myself a far less stressful job

:rotfl:

When you get out into the 'real' world, I expect you will find working 48 weeks a year will be a tad more stressful.

terryw

Just to let you know that you will be giving up all this:


By opting out of the TPS I will forfeit the right to the following scheme benefits in respect of future service:
+ my employer contributing 14.1% of my salary towards the cost of my benefits;
+ a guaranteed pension at normal pension age;
+ the option to take a tax free lump sum;
+ pension value protected through full index linking;
+ access to ill-health benefits, should I become permanently unable to teach;
+ children’s and dependants’ pensions;
+ in-service death grant.
I have read and understand the points above.

Also the contributions paid into the Teaching Scheme can be transferred to many other schemes in the future.

slummymummyof3

Rather than leaving the profession entirely, have you considered looking for a different position in another school? I don't know what your health reasons are - perhaps you should consider being signed off sick for a period of time in order to aid recovery so that you are able to remain in post and return when you are in better health?