Teachers Pension/Savings Part-timer Advice

mageliken

I have been a part-time teacher for 3 years and opted-in to the teachers pension scheme at the time without fully understanding, but believing that it was a "good deal". I still believe it is a good deal, and I still don't full understand it - so I'm looking for some help/advice.

I'm 25 and earn only around £5k/year through this teaching, and this is my only pension. I’ve never received an Annual Benefit Statement, but I can see that I have 115 days reckonable service at the end of March 2014. Even though this may not be worth much at all, am I right in thinking that it’s still worthwhile given my employer’s contributions?

My work when I’m not teaching is contracting on a self-employed basis. The majority of my savings (~£25k) are in ISAs/savings current accounts.

My broad question really, is where should I be focussing my savings? I am trying to save as much as I can and I am also trying to increase the profits in my business as possibly the single most important thing that can have the largest impact. In the interim, I want to make what I do have work for me.

I would welcome some pointers as to how I would go about working out: should I continue saving as I am now? Is there any merit in purchasing additional contributions to my teachers pensions (I believe there are a number of ways - does my employer make contributions in the same way as they do now?). Should I be seeking to take out my own private pension?

My basic understanding of pensions is that they’re a good way of reducing tax liability for income. I’m not sure whether or not, at this time, my income is at a level where this merits much concern. Given that I’m not likely to be a teacher looking forward three years, if there’s a way to take advantage of my teacher’s pension I would like to.

Apologies for the broad and novice questions, but as I say any pointers would be greatly appreciated! I’m suddenly feeling the pressure of a ticking clock with regards to building up a pension, and I don’t know how legitimate this feeling is. I also have the feeling that what I do have saved isn’t especially working well/hard for me with current interest rates.

jem16

mageliken wrote: »

I'm 25 and earn only around £5k/year through this teaching, and this is my only pension. I’ve never received an Annual Benefit Statement, but I can see that I have 115 days reckonable service at the end of March 2014. Even though this may not be worth much at all, am I right in thinking that it’s still worthwhile given my employer’s contributions?

You're correct in that it won't be that much just now. However your employer obviously does contribute although it's meaningless with regards your benefits.

At the moment though you would make back your own contributions within 10 years of retirement so definitely a good idea to stay in it.

I would welcome some pointers as to how I would go about working out: should I continue saving as I am now? Is there any merit in purchasing additional contributions to my teachers pensions (I believe there are a number of ways - does my employer make contributions in the same way as they do now?).

You are making the most of your employer contributions just now. Any additional contributions doesn't gain from employer contributions so I don't think there is much need for that yet. Added pension is usually much better than AVCs if you do want to contribute more.

Should I be seeking to take out my own private pension?

That is another option and better than AVCs in my opinion. It will give you the flexibility of retiring earlier than the TPS will allow which will soon be state retirement age.

My basic understanding of pensions is that they’re a good way of reducing tax liability for income. I’m not sure whether or not, at this time, my income is at a level where this merits much concern. Given that I’m not likely to be a teacher looking forward three years, if there’s a way to take advantage of my teacher’s pension I would like to.

They are good but you could work on building up your business and see where things go with teaching.

Apologies for the broad and novice questions, but as I say any pointers would be greatly appreciated! I’m suddenly feeling the pressure of a ticking clock with regards to building up a pension, and I don’t know how legitimate this feeling is. I also have the feeling that what I do have saved isn’t especially working well/hard for me with current interest rates.

Savings aren't good for long term planning as they run the risk from inflation.

Certainly using your business for pension planning is tax effective.