Teachers' pension - stay? go?

hieveryone

Hi everyone,

Looking for a bit of advice on a teachers' pension. I don't understand too much about it other than what I've heard on the grapevine - that it's a 'final salary' pension and I'd be daft to ever think about leaving it.

Is this true? I am paying something like £150 a month at the moment and with the prospect of a new job I could be looking at £250. It seems like a lot of money - for which I don't know what I will get at the end of it. And whether I'll still be young enough to enjoy it :rotfl::rotfl:

Anyone have any ideas? Obviously there's a lot going on with teachers' pensions at the moment with unions etc, but I'm still not really any the wiser.

An additional query - if I were to leave the scheme, are contributions I've paid so far refundable?

Thanks in advance

CLAPTON

my advice would I hope be what you would advise your pupils to do ... read the rules of the pension scheme
but briefly you would be absolutely mad to leave the scheme, completley barking mad.

read the scheme rules and then come back and ask any specific points that arise.

JoeCrystal

Yes, you ARE daft of thinking of opting out. If I want to do it privately, I would need to pay 25% or more of my salary into private scheme with pension fund totally reliant on investment return so no idea what kind of income I will be getting by the time I will retire. Teacher's pension and indeed, most defined benefit pension schemes do not have that, instead, it is your employer that assume all the investments risk, so you know exactly what you are getting.

So, £250 per month may seems a lot of money to you but it is very cheap for contribution into teacher's pension!

Cheers,
Joe

hieveryone

CLAPTON wrote: »

my advice would I hope be what you would advise your pupils to do ... read the rules of the pension scheme
but briefly you would be absolutely mad to leave the scheme, completley barking mad.

read the scheme rules and then come back and ask any specific points that arise.

JoeCrystal wrote: »

Yes, you ARE daft of thinking of opting out. If I want to do it privately, I would need to pay 25% or more of my salary into private scheme with pension fund totally reliant on investment return so no idea what kind of income I will be getting by the time I will retire. Teacher's pension and indeed, most defined benefit pension schemes do not have that, instead, it is your employer that assume all the investments risk, so you know exactly what you are getting.

So, £250 per month may seems a lot of money to you but it is very cheap for contribution into teacher's pension!

Cheers,
Joe

Believe me, I have tried and tried to read pension guidelines and they baffle me completely :rotfl:

Thank you for your help though, will try to keep investigating.

JoeCrystal

hieveryone wrote: »

Believe me, I have tried and tried to read pension guidelines and they baffle me completely :rotfl:

Thank you for your help though, will try to keep investigating.

At least you ask, rather than leaving. Seriously, ask us questions, we are always happy to help you to understand the scheme rules.

Cheers,
Joe

jamesd

it's generally fairly easy: if you are in one of the public sector defined benefit pensions - final or career average or whatever salary - stay in because it's effectively impossible to buy the benefits you'll get at anything like the same cost.

There are very limited exceptions, like people who know they will die soon.

xylophone

https://www.teacherspensions.co.uk/public/the-scheme/active-teacher/doing-the-sums.aspx

dartilov

Hi

I agree with jamesd "if you are in one of the public sector defined benefit pensions - final or career average or whatever salary - stay in because it's effectively impossible to buy the benefits you'll get at anything like the same cost."

I was in the RAF for 22 years and got a great pension considering it was "non-contributory" and now work in a school on the LGPS and the employer paid element enhances my future pension no end.

I would estimate that there must be a 97-98% participation of teachers in the TPF and it is not hard to see why.

atush

Hi, I am guessing you don't teach maths lol? But that is Ok, I couldn't teach dance even if I can carry a beat or two.

At any rate, you would be STUPID to leave the teachers pension. It is a FS pension, and even if you put in 150-250, to get the same pension in the end outside a FS pension it would be you putting in 450-750. Or more if you take into acct other benefits tied to your pension such as Death in Service (ie you die while still on the job and your family get 3-4x your salary etc).

Those in the private sector have to pay extra for this in most cases.

Basically, the difference between the teachers (or any) FS pension is that although you contribute- your pension is NOT based on what the financial/equity/bond/currency markets do. You get the same benefits whatever happens. Which means you suffer NO RISK (not what happened to those of us with Money purchase pension in 2008 as well lost money int he recent market turmoil). Which is something most (almost all private FS pensions have been closed to new members) private sector pensions don't experience. you get what you get no matter what happens in world markets.

In Private sector pensions (ie money purchase), you get an employers contribution in, but any investment growth (and pension received in the end) are all based on investment returns so all the RISK is all carried by the employees (and not the employer/taxpayer as in the case of FS public pensions such as the teachers one).

So, stay in your pension. As nothing you could do with that 150-250 per month could be as good. I know this as we put in thousands per month, and wont get as good.

bigfreddiel

hieveryone wrote: »

1 it's a 'final salary' pension

2 I could be looking at £250.

3 if I were to leave the scheme, are contributions I've paid so far refundable?

1 you know exactly what you will be getting

2 try a pension calculator and see what £250/month will buy you - and its no guaranteed - ignore forecasts based on 7% or more growth - and don't forget those outrageous costs companies will take for running the fund - unless you diy but from your post i don't think you could do that

3 read the pension handbook - probably not

glad to help

fj

hyubh

hieveryone wrote: »

Believe me, I have tried and tried to read pension guidelines and they baffle me completely

It isn't really that difficult. If you're a full timer, in the scheme for twenty years and end on a salary of £50,000, then on the current setup you'll have a pension of 50000 / 60 x 20 = £16,667 a year. Each £1 of pension you would then be able to commute (i.e., forgo) for £12 of lump sum. E.g., you might drop down to a pension of £13,334 a year in order to have a lump sum of £39,996 on retirement ([16667 - 13334] x 12).