Aged 50 with only 3 years of Teachers pension- advice desperately needed!

jem16

xxdeebeexx wrote: »

Hi, sorry to hijack the thread.
I'm very interested in adding to my Teachers pension - where do I find out about it please?


tia


dx

https://www.teacherspensions.co.uk/campaigns/active/top-up-your-pension/t/register.aspx

atush

Do consider if you intend to retire early and take your pension actuarily reduced. If so, paying for extra years that then could be cut in half seems a bad idea.

I would split the extra money you have, between extra TPS (non spousal benefit) and a DC pension which could be taken so that you dont have to take your TPS early/reduced.

jamesd

Extra time in the TPS is a good deal. Safe and at a reasonable price.

The actuarial reduction issue is a big one. Personal pensions can be taken from age 55 and that can allow retirement before the normal retirement age of workplace pensions. The personal pension pot can fund the living while you wait to take the work pension until its normal retirement age, so you don't have it reduced for taking it early.

You will probably be able to get to £7500 a year from the flat rate state pension. Because you will have been contracted out via the TPS it'll take more than 35 years to get to that maximum but self-employed contributions after you've ceased most work are cheap enough.

You can also consider using equity release to help you retire earlier. First you will need to work out what your state pension plus normal retirement age TPS pension will be. If that is more than you need to live on then you can consider equity release to retire earlier, knowing that you will be able to use the extra income to repay the equity release money. If you want to do this just to retire early and not to provide a long term income boost it's vital that you are cautious about your required spending, don't go to far or you may not be able to repay.

Using equity release will usually be a better deal than taking a workplace defined benefit pension before normal retirement age: the cost of fees and interest usually ends up lower than the amount lost by taking the pension early.

A better option than equity release for those who are young enough is a normal mortgage with an end date well into retirement. Equity release mortgages tend to be more expensive and limit the amount borrowed in part based on age, so this can free up more money.

Equity release can also be used to subsidise spending long term, for the rest of life by drawing down an equity release allowance or taking a lump sum and investing it. That is not the use I'm describing here, though. This longer term use can be appropriate for those who do not want to die with their money tied up in a property instead of used to benefit them while they are alive.

If you do use the equity release or mortgage options please do be sure that you plan for the costs during the rest of your life so that it's not a case of "I've left myself no choice" but rather of "this is a deliberate plan that lets me achieve my objectives sooner and more efficiently".

chucknorris

penwise wrote: »

chucknorris - is it index linked and does it include some spouse protection?

It inflates inline with CPI, you can elect to pay extra for spouse protection, we don't need it, if I die early my wife will inherit an awful lot from other sources. Just noticed Jem already answered for me.

financiallyineptacademic

Just want to thank you all for your considered replies.
i've decided to purchase additional pension via my TPS.
I'm going to aim to make a one off payment of £12,000 each year to buy £1000 per annum until I reach the maximum of £6,500.

Does anyone know whether TPS raise the cost for additional pension frequently or not?
I've looked at purchasing the full amount now via monthly pay packet debits but it works out as much more expensive than making lump sum purchases.
Anyway, i can see a do-able way forward now which I couldn't see before! Thank you all x

financiallyineptacademic

Thanks, so much for this but don't fancy an equity release option.

xylophone

Just want to thank you all for your considered replies.
i've decided to purchase additional pension via my TPS.
I'm going to aim to make a one off payment of £12,000 each year to buy £1000 per annum until I reach the maximum of £6,500.

Does anyone know whether TPS raise the cost for additional pension frequently or not?
I've looked at purchasing the full amount now via monthly pay packet debits but it works out as much more expensive than making lump sum purchases.
Anyway, i can see a do-able way forward now which I couldn't see before! Thank you all x

Check the tax relief situation. See http://community.tes.co.uk/tes_retirement/f/117/t/513187.aspx

LHW99

One other suggestion if you do go part time - when I was teaching you had to actually "opt in" to get your part-time service counted for the TPS.

I had to fill in a form, which the school sent in. It meant that I continued to build up TPS pension (albeit at a slower rate) while only working 2 or 3 days a week.

It all adds up!

chucknorris

financiallyineptacademic wrote: »

Does anyone know whether TPS raise the cost for additional pension frequently or not?
I've looked at purchasing the full amount now via monthly pay packet debits but it works out as much more expensive than making lump sum purchases.
Anyway, i can see a do-able way forward now which I couldn't see before! Thank you all x

The cost will rise as you get nearer to retirement age, use the calculator on the TPS website by adjusting your DOB, this will give you a good indication of how the price rises as your age increases.

Bootsox

financiallyineptacademic wrote: »

Thanks, so much for this but don't fancy an equity release option.

Glad you said that, based on your relative youth, the equity release option sounded suicidal to me as well!