What will happen when I retire?

level200

Perhaps no one need use this forum anymore as the standard reply seems to be 'why should I help and answer your question, look it up yourself'!

I'm removing my account now, fed up with a******* getting on their high horse instead of helping. if you cant help why take the effort to write such remarks! :mad:

jamesd

level200 wrote: »

I'm 43 and have been paying into a teachers pension for the last 11 years. before that I was working and paying national insurance most of my working life. When I retire will I be able to get my teachers pension and a state pension?

Yes. You have an excellent foundation for retirement there and should be quite well off compared to most retirees if you continue as you have been.

Be sure you stay in the pension even if there's fuss about it offering a worse deal than it used to. It's still almost certainly going to be better than just about any private sector deal you could get, so keep on track for the big picture rather than worrying too much about the tweaks.

The biggest aspect not tacked by the state and public sector pensions is retirement age. We all get to decide when we want to retire and with what minimum income level. Then we have to provide the money to do it. If that means retiring before state pension age it means putting enough money away in S&S ISA investments or a pension to provide sufficient income or saved capital to provide the income until the state pensions start. If there's a work pension involved it'll mean providing until that starts, or perhaps topping up its income level until the state pensions start.

Standard private pensions that you can use today have a minimum age of 55 when income can be taken and there's a cap on how rapidly money can be withdrawn, around 5-6% of the capital value a year. The S&S ISA approach has similar investment options, tax relief when taking income instead of on the way in. But the ISA has a key advantage that you can withdraw an unlimited amount of the capital to top up your income. That lets you use it for high withdrawing rates over a shorter time than a pension, a good choice if you only need a boost for a few years, or if you need to withdraw say 10-15% a year for ten years.

Your tax rate affects the best choice. If you're a higher rate tax payer that shifts the optimal balance towards a higher pension component.

How early you want to retire also affects the choice. If you want to retire before 55 you can't use a pension to provide the income. If you want to retire only a couple of years before state pension age then an ISA maybe the best choice. Otherwise a blend of the two is likely to be best.

You might also consider whether you want to plan for contingencies like unemployment for the long term or inability to work. Since these can happen before age 55 you'd need substantial non-pension investments to handle them. You can also use permanent health insurance to cover medical inability to work.

xylophone

medical inability to work.

This might be covered by ill-health retirement in TPS.

Rich1976

jamesd wrote: »

Yes. You have an excellent foundation for retirement there and should be quite well off compared to most retirees if you continue as you have been.

Be sure you stay in the pension even if there's fuss about it offering a worse deal than it used to. It's still almost certainly going to be better than just about any private sector deal you could get, so keep on track for the big picture rather than worrying too much about the tweaks.

The biggest aspect not tacked by the state and public sector pensions is retirement age. We all get to decide when we want to retire and with what minimum income level. Then we have to provide the money to do it. If that means retiring before state pension age it means putting enough money away in S&S ISA investments or a pension to provide sufficient income or saved capital to provide the income until the state pensions start. If there's a work pension involved it'll mean providing until that starts, or perhaps topping up its income level until the state pensions start.

Standard private pensions that you can use today have a minimum age of 55 when income can be taken and there's a cap on how rapidly money can be withdrawn, around 5-6% of the capital value a year. The S&S ISA approach has similar investment options, tax relief when taking income instead of on the way in. But the ISA has a key advantage that you can withdraw an unlimited amount of the capital to top up your income. That lets you use it for high withdrawing rates over a shorter time than a pension, a good choice if you only need a boost for a few years, or if you need to withdraw say 10-15% a year for ten years.

Your tax rate affects the best choice. If you're a higher rate tax payer that shifts the optimal balance towards a higher pension component.

How early you want to retire also affects the choice. If you want to retire before 55 you can't use a pension to provide the income. If you want to retire only a couple of years before state pension age then an ISA maybe the best choice. Otherwise a blend of the two is likely to be best.

You might also consider whether you want to plan for contingencies like unemployment for the long term or inability to work. Since these can happen before age 55 you'd need substantial non-pension investments to handle them. You can also use permanent health insurance to cover medical inability to work.

If people save in their own private pension ( and lets face it most people aren't even doing that ), whats to stop the legislation from changing several years from now meaning that people can't retire on that until well into their 60's or even linking it to State Retirement age - meaning that people can't claim on both until the same time. If it costs the Insurance industry a lot now in paying out for pensions for people living longer, surely it is only a matter of time before they say they will have to pay out later? And not everyone can afford to have a big 'non pensions pot' certainly not big enough to last a few years before their pension pays out.

Its no wonder people are confused about when or even if they can retire as there is too much uncertainty and no doubt many more changes and tinkering with the rules to come.

atush

level200 wrote: »

Perhaps no one need use this forum anymore as the standard reply seems to be 'why should I help and answer your question, look it up yourself'!

I'm removing my account now, fed up with a******* getting on their high horse instead of helping. if you cant help why take the effort to write such remarks! :mad:

Most people get great advice here. but if you act like a numpty you might get numpty advice.

I think you were given some good advice, but comments you may have made got people's backs up.

Feel free to go elsewhere for your free, non paid, non union advice.

but to reiterate:

Stay in the teachers pension. Even with changes, best you can do. Yes of course, you and anyone else can have both a private and state pension. If you pay into both.

The level of both, will depend on how many years you pay in.

jamesd

The pension rules can change. The ISA rules can change. Property taxes and CGT rules can change. Income tax can change. People can get hit by a bus. That's just the nature of things. Politicians tinker, life happens, the world goes on with people planning as well as they can along the way.

The insurance industry doesn't decide when people can get pension money, the government does. You don't even have to use an insurer at any point if you don't want to. If you do choose to buy an annuity, something that is optional, you don't have to buy that from an insurer either. The annuity business, whether an insurer or not, doesn't have a reason to care when the age is because all they do if life expectancy changes is reduce how much income they provide if it's longer.

It's up to people to decide if they want to retire earlier and on what income. If they have no spare money at all after basic living expenses they get little or no choice. If they have paid for TV service or a new car instead of a second hand one or a bigger or better home than they strictly need or an annual holiday or more away from home they are making choices. They could make different choices if they decide to give more priority to retiring. Or not, it's up to them. Here we can tell them about options and how to get things done, up to each person to choose what to do about it, if anything.

atush

Rich1976 wrote: »

If people save in their own private pension ( and lets face it most people aren't even doing that ), whats to stop the legislation from changing several years from now meaning that people can't retire on that until well into their 60's or even linking it to State Retirement age - meaning that people can't claim on both until the same time. If it costs the Insurance industry a lot now in paying out for pensions for people living longer, surely it is only a matter of time before they say they will have to pay out later? And not everyone can afford to have a big 'non pensions pot' certainly not big enough to last a few years before their pension pays out.

Its no wonder people are confused about when or even if they can retire as there is too much uncertainty and no doubt many more changes and tinkering with the rules to come.

dont use possible future changes to relieve yourself of the obligation to contribute to a pension at all today. I see this every day and is such a wimpy response.

there are 2 reasons pensions you pay into are disappointing in the long term. either you pay into plans that have too high a charge (not a problem so much if you have 'free money' from your employer).

Or more likely, you aren't/didn't pay in enough in the first place.

Rich1976

atush wrote: »

dont use possible future changes to relieve yourself of the obligation to contribute to a pension at all today. I see this every day and is such a wimpy response.

there are 2 reasons pensions you pay into are disappointing in the long term. either you pay into plans that have too high a charge (not a problem so much if you have 'free money' from your employer).

Or more likely, you aren't/didn't pay in enough in the first place.

Yep fully agree with that. I have been paying into a pension since I was 22 - so 14 years now and it is now worth about 30k and I fully intend to keep paying into it ( although the contributions are not as high as I would like ) even though we have made cutbacks to everything in our life and don't waste money. I keep a detailed budget so I know where the money goes ( petrol mainly ) which is our second biggest expense after the mortgage. I also pay into a s+s ISA, again not a huge amount.

I hope that when I get to 60ish there is still the choice of retiring if we can afford it ( but as I was saying depending on whatever legislation is applicable at the time for drawing on pensions etc ) and not to feel forced into continuing to work indefinitely - which I can see so many people of my generation and younger having to do. I check the forecasts of what our pensions 'may' provide when we get to 60, 65, 67 etc and it is still scary even though my fund is currently 30k and my wife's is 25k and we think will that be enough?

so for people who don't contribute anything to a retirement fund there is going to be a lot of them in the brown stuff when they get to the 60's and feel compelled to keep working before they get their pension.