Additional Pension Benefits?

Alan5

Hi Folks,
I am new to this forum, hope I'm not making any errors! I have an option to purchase APB to support my Teachers Pension. I am 55 and plan to retire at 60. These are index linked and would cost me now £33000 to buy additional pension of £2000 (before tax). There are no benefits to my wife if I die early. At the moment we only save cash in ISA. Being a 'belts and braces' person but financial numpty, these seem like a reasonable idea, any views?

redbuzzard

Is that a CPI-linked £2,000? Sounds like a bargain unless you're feeling very mortal. If that was a market based annuity it would cost you nearer £100k at a guess.

If you get tax relief on the £33,000 it's even better.

I should qualify that and say I have no particular knowledge of the Teachers' Pension Scheme.

jem16

Alan5 wrote: »

Hi Folks,
I am new to this forum, hope I'm not making any errors! I have an option to purchase APB to support my Teachers Pension. I am 55 and plan to retire at 60. These are index linked and would cost me now £33000 to buy additional pension of £2000 (before tax). There are no benefits to my wife if I die early. At the moment we only save cash in ISA. Being a 'belts and braces' person but financial numpty, these seem like a reasonable idea, any views?

Yes it does look like a good idea if you want a no risk option. £33k lump sum with basic rate tax relief would mean it would cost you £26,400. Less if you're a higher rate taxpayer.

The £2k additional pension would be £2263 when you take it if CPI was 2.5%. So around 11 years to break even - less as it's index-linked.