Transfer Teachers' Pension to SIPP

kidmugsy

Either we're dealing with a tease here, chaps, or a schoolteacher.

tjd08

@Linton - Thanks. My thinking is that if the 'transfer value' (e.g. sum to actually be transferred into the SIPP) is equal or greater than the money taken from salary payments into the scheme, then it's worth looking at.

But personally, with 30-40 years until retirement, the difference in growth potential between an inflation-linked investment vs a bond-equity investment is worth the move.

Your_Hero

tjd08 wrote: »

@Your Hero - I've been unable to find the formula for this. If you have it, please let me know.

https://www.teacherspensions.co.uk/members/the-scheme/teacher-planning-retirement/calculating-benefits.aspx

How retirement benefits are calculated
If you were a scheme member before 1 January 2007
Your benefits are made up of an annual pension and a lump sum. Both are calculated using your reckonable service and average salary. Your pension is 1/80th of the average salary for each year of pensionable employment. This is taxable. The lump sum is 3 times your annual pension. You can also increase this lump sum by converting part of your pension, provided you have service on or after 1 January 2007.

Use our pension and lump sum modeller to see how much you could get at retirement.

If you became a scheme member on or after 1 January 2007
You will receive an annual pension calculated at 1/60th of the average salary multiplied by your reckonable service. The pension is taxable. You don’t automatically get a lump sum. However, you may convert up to a maximum of the total pension value of your benefits into a lump sum. Each £1 of pension that you convert will create £12 of lump sum. See how taking a lump sum will affect your annual pension by using pension calculator.

Average salary
If you have been in pensionable service on or after 1 January 2007, your average salary is the greater of the last 365 days of pensionable salary, or the average of the best 3 consecutive years salaries revalued in the 10 years prior to leaving service.

If you have no pensionable service on or after 1 January 2007, your average salary will be the best 365 days in the last 1095 days before you left service.

Personally, I'd prefer to take the risk. Does anyone know of a SIPP provider that I can at least talk to who allow this?

Majority of providers that I know normally require you to receive advice from an IFA to assess the case and see if it's in your financial interest to do so. It most likely isn't so probably no IFA will do it.

tjd08

@SomeUser: Thanks. It may be that it's just not worth it. It's just we don't know where we stand. I want to understand the pounds and pence involved. Would you care to share your occupational scheme provider (via PM if preferred), or any other providers that may allow this please?

tjd08

@Your Hero - call me lazy, but someone should really put a spreadsheet or online calculator in place for this!

Drp8713

tjd08 wrote: »

Personally, I'd prefer to take the risk. Does anyone know of a SIPP provider that I can at least talk to who allow this?

How can you know its a risk without an IFA doing an analysis? A risk would be that you need your SIPP to grow by 7% a year to match Teachers. If your SIPP needed to grow by 25% a year that risk becomes almost an impossibility and that the SIPP would lose you money.

In which case no IFA or provider is going to want to help you lose money

RichandJ

tjd08 wrote: »

@Your Hero - call me lazy, but someone should really put a spreadsheet or online calculator in place for this!

Are you volunteering ?

I write spreadsheets to calculate occupational final salary pension benefits. Every scheme is different, every scheme presents it's own programming issues. I have one with over 200 lines of calcs depending on gender, date joined, date left etc etc ad infinitum.

Linton

tjd08 wrote: »

@Linton - Thanks. My thinking is that if the 'transfer value' (e.g. sum to actually be transferred into the SIPP) is equal or greater than the money taken from salary payments into the scheme, then it's worth looking at.

But personally, with 30-40 years until retirement, the difference in growth potential between an inflation-linked investment vs a bond-equity investment is worth the move.

I dont think you quite understand. Your payments into the TPS dont pay even half the cost of your pension. Your employer will bear most of the cost, this is money you are proposing to give up.

SomeUser

An occupational scheme is your own employer's trust based scheme if you have one.

tjd08

@Linton - You're right, I didn't realise this. I assumed a TPS to SIPP transfer would include the Teacher's Contributions + School/Employer/LEA Contributions.

If a transfer would lose all of the employer's contributions, then we'd take a 50% (ish) hit straight away?