Removing Contributions to pay debt

xylophone

It is also worth adding that I am leaving this job in August. Unclear what the pension scheme of the next employer is.

Do you mean that you are leaving teaching altogether or that you are changing schools?

https://www.teacherspensions.co.uk/members/your-scheme/your-working-years/what-happens-if-i-leave-pensionable-service.aspx

hyubh

brokenglish wrote: »

It is not final salary it is a teacher pension.

The TPS moved from final salary to CARE in April, but both are still DB. Especially since it's an unfunded public sector scheme, the 14.1% is somewhat arbitrary.

It is also worth adding that I am leaving this job in August. Unclear what the pension scheme of the next employer is.

All the more reason to stay in it while you can then - if you're heading to the private sector, you are very likely not to get anything even approaching the current TPS CARE scheme.

Also keep in mind that as a member of the TPS you have been contracted out of the State Second Pension; if you opted out and took a refund, then you'd get just your own contributions back, less both tax and NI relief. Given your age the very small amount of SSP earned will be worthless because you will likely end up with more than enough years to get your eventual 'single tier' state pension anyhow.

brokenglish

xylophone wrote: »

Do you mean that you are leaving teaching altogether or that you are changing schools?

Leaving altogether.

atush

xylophone wrote: »

Certainly DB but not necessarily FS.

https://www.teacherspensions.co.uk/members/your-scheme/your-working-years/how-do-i-know-which-arrangement-or-arrangements-i-am-in.aspx

I knew this, but we are in danger of confusing the OP here.

brokenglish

Thanks for all your responses I feel like I have a better grasp of this situation and pensions in general now. A lot to look up, I had no idea what CARES or SSP were!

However, I still feel unclear as to what to do next. I am fully aware that I will lose the employers contribution and the tax relief. And this money that I stand to lose is greater than the current high interest debt that I have. This might make it seem like a simple decision long term, but I don't think its the only factor worth considering. Furthermore, though it might be a brilliant pension I am leaving and there really isn't that much in it. It would be a career average, but I have not worked for two years so I don't qualify. There are other DB schemes I can move it to, but it is not clear that is what I will be entitled to in my future role.

The teachers pensions website also says this:

"If you’ve not qualified for benefits because you have less than two years pensionable service you can have a repayment of your contributions. If you were already in receipt of benefits from the Scheme you cannot have a repayment, but will receive additional benefits."

Sorry for going on, but I also think it is worth considering that I am under a lot of stress and pressure to deal with the high interest payment now. My career, education and relationship choices are affected. I believe much more drastically now than they would be in 45 years time.

brokenglish

atush wrote: »

I knew this, but we are in danger of confusing the OP here.

I have a rudimentary, but satisfactory understanding of this now. Thanks for your concern though.

hyubh

brokenglish wrote: »

There are other DB schemes I can move it to, but it is not clear that is what I will be entitled to in my future role.

Is the new employer likely to be public or private sector? (If it matters, for this question a university would almost always count as the former.)

xylophone

You have a new job? If so, what are the pension arrangements?

Have you really looked in detail at your spending?

When you start another job, are you going to opt out of the pension?

And in the next job?

You don't have to starve or be a recluse but you need to get a grip on your spending or you will be forever finding reasons why you can't save/make pension contributions.

Had you thought of doing some part time work in order to earn extra money to pay down your debt more rapidly?

dunstonh

Sorry for going on, but I also think it is worth considering that I am under a lot of stress and pressure to deal with the high interest payment now.

Its difficult to know without figures. They will be figures given to you when you leave. However, its not uncommon to see figures along the lines of £500 returned if you leave the scheme within 2 years vs £5000 if you transfer it to another pension.

MPD

OP has contributed £3000 with 7% contributions, employer contributions are 14.1%, near enough double so that will be £6000. A total of about £9000.

Return of contributions less tax and NI would be about £2000. A very quick £7000 loss.

Transfer it to another pension when you leave.

Have you thought of marking exam scripts?