Opting Out of Public Sector Pension ?

johnsmclean

Hi
wonder if I can get some general advice.

With the changes to public sector pensions that will almost certainly come in to force my wife will not get one of her pensions until she is 67. She will get a pension from a previous employer at 60. I can retire at 60 and my wife would like to do so as soon as she turns 60.

Question 1. If she was to opt out of her public sector pension and start a private one 'til she was 60 would her employer contribute ?

Question 2. I am a higher tax rate payer. If she opted out could we put the money she isn't paying into a top up pension in my name (and get higher rate of tax relief) ?

Thanks in advance.

Yorkie1

I very much doubt that a public sector employer will contribute to a private pension scheme instead of the public sector scheme.

atush

Don't opt out. There is no circumstance that I know of in which it would be a good idea. Unless maybe you are a consultant surgeon who has gone over the lifetime limit of 1.5 miilion in contributions.

Even with the changes, it will be far far better than anythng you can arrange yourself via a private pension.

Only some employers contribute to a personal pension. But if they do and you work there join it. but if you quit a public serivce job just because of the pension you will regret it.

You can retire early from your publc service job and take your pension from 60 in most cases as past contribution years are not affected, just those going forwards. You will take a reduction in the amt paid, but you can retire early. But think twice if you are in good health before doing so.

If you want to lower the tax you pay, just sacrifce some of your own salary to a pension- even tot he point of taking yourself out of HRTax altogeher.

Schemes are different, and you don't say which ones you are a member of. So ask your personel dept.

johnsmclean

Thanks for quick replies. We just don't want to wait 'til my wife turns 67. As you point out can probably get her pension through early retirement when 60 at reduced amount. We have both worked full time on OK salaries for 35 years plus so hopefully going early would not be a problem.

zagfles

Ignore all the bull from the unions, even with the proposed changes the public sector pension schemes will still be far better value than most private sector schemes and any personal scheme. The normal retirement age might be 67 but it'll almost certainly have an early retirement option where it gets reduced for being paid early. But even with this you'd almost certainly get much more than if you invested her contributions in a personal pension.

atush

it will only be 65-67 for the years going forwards. All past years will stay at the earlier age (in most cases 60).

dunstonh

Question 1. If she was to opt out of her public sector pension and start a private one 'til she was 60 would her employer contribute ?

She will probably find that not many, if any, pension providers will offer her a personal pension. Most have the opt out question now and will refuse to accept contributions if you are an opt out. Mainly as it is such a bad idea.

Question 2. I am a higher tax rate payer. If she opted out could we put the money she isn't paying into a top up pension in my name (and get higher rate of tax relief) ?

But you will pay more tax in retirement than she will and death benefits will be lopsided. (you both have a personal allowance, any not used it wasted)

jem16

johnsmclean wrote: »

Question 1. If she was to opt out of her public sector pension and start a private one 'til she was 60 would her employer contribute ?

No

Question 2. I am a higher tax rate payer. If she opted out could we put the money she isn't paying into a top up pension in my name (and get higher rate of tax relief) ?

Thanks in advance.

Yes but it becomes your pension income and will be taxed as your income.

As others have said she would be foolish to opt out. She can take it early but for each year early it would be reduced by approx 5%pa.

Which public sector pension scheme is it? What is the normal retirement age at the moment?

johnsmclean

jem16 wrote: »

No



Yes but it becomes your pension income and will be taxed as your income.

As others have said she would be foolish to opt out. She can take it early but for each year early it would be reduced by approx 5%pa.

Which public sector pension scheme is it? What is the normal retirement age at the moment?

Scottish Teachers. NRA is 60 going up to 67. She has £10k from other pension which kicks in at 60.

jem16

johnsmclean wrote: »

Scottish Teachers.

Same as me then.

NRA is 60 going up to 67.

I assume she is not currently 50 or over? If of course that "offer" remains.

Use this calculator and it will work out what her pension would be at 60 as opposed to 67. It's from the English teachers' website but it will be the same.

http://www.teacherspensions.co.uk/calculator/calculator_disclaimer.htm

johnsmclean

jem16 wrote: »

No



Yes but it becomes your pension income and will be taxed as your income.

As others have said she would be foolish to opt out. She can take it early but for each year early it would be reduced by approx 5%pa.

Which public sector pension scheme is it? What is the normal retirement age at the moment?

Scottish Teachers. NRA is 60 going up to 67. She has £10k from other pension which kicks in at 60.