Teachers 'Additional Pension'

fizio

I'd say do it sooner rather than later as am just trying to buy some additional pension for my OH (supply teacher) with 10 years to go and its £15k for £1000 annual pension.. Still, better than many alternatives

kidmugsy

kidmugsy wrote: »

In your shoes, OP, I'd consider waiting until my contributions let me avoid higher rate tax. On the other hand, by then the opportunity might no longer exist.

If it's not bad manners to "quote" myself, let me elaborate. If you calculate how much per month you can put into extra pension investments, you can then instead put it into a different vehicle e.g. ISAs. Then when you face 40% tax (or 75% or whatever it then is) you can withdraw money from those vehicles and bung it into your pension. That is likely to be a pretty profitable manoeuvre, and it anyway preserves flexibility.

jem16

kidmugsy wrote: »

If you calculate how much per month you can put into extra pension investments, you can then instead put it into a different vehicle e.g. ISAs.

I would agree that using S&S ISAs would probably be best for a basic rate taxpayer. It could give the OP the flexibility to retire before state pension age without having an actuarial reduction.

Then when you face 40% tax (or 75% or whatever it then is) you can withdraw money from those vehicles and bung it into your pension.

As long as the OP does not expect to face 40% tax as most teachers never will.

ViolaLass

jem16 wrote: »

I would agree that using S&S ISAs would probably be best for a basic rate taxpayer. It could give the OP the flexibility to retire before state pension age without having an actuarial reduction.

That's what I'm currently doing. I have an OH who will probably not have much pension of his own so I'm also trying to work out how best to provide for both of us.

jem16 wrote: »

As long as the OP does not expect to face 40% tax as most teachers never will.

Not impossible - particularly on the second scale - but yes, unlikely at least for some years.

jem16

ViolaLass wrote: »

Not impossible - particularly on the second scale - but yes, unlikely at least for some years.

I'm not familiar with the English system for pay although looking at the pay scales even the Upper Pay 3 does not cross into higher rate tax except for Inner London. By the time you deduct the normal pension contributions, you would be nowhere near.

For most teachers, you would need to be in promoted posts. However perhaps that's part of your plan.

ViolaLass

http://www.tes.co.uk/article.aspx?storycode=6000193

shows all three post-threshold pay points above £32k.

jem16

ViolaLass wrote: »

http://www.tes.co.uk/article.aspx?storycode=6000193

shows all three post-threshold pay points above £32k.

Yes but higher rate tax starts at £41,450 not £32k.

kidmugsy

jem16 wrote: »

As long as the OP does not expect to face 40% tax as most teachers never will.

Ha! The basic rate was 35% in 1976. The notion that a young teacher will face a marginal rate of 20% throughout her career seems far-fetched to me.

jem16

kidmugsy wrote: »

Ha! The basic rate was 35% in 1976. The notion that a young teacher will face a marginal rate of 20% throughout her career seems far-fetched to me.

It's still basic rate tax though, no matter what the rate is.

I'm about to retire and have never paid higher rate tax on my teacher's salary.

ViolaLass

jem16 wrote: »

Yes but higher rate tax starts at £41,450 not £32k.

I'd forgotten it was plus the personal allowance, my mistake. In which case, you are right.