Can I make this small pension entitlement work more efficiently for me?

Legacy_user

I have been wondering if anyone here has any suggestions about how I could best resolve this situation regarding a very small local government pension entitlement.

First of all some context. I recently took final phased retirement from teaching after 35 years. I decided to take the maximum lump sum to clear the mortgage and other small debts. A useful amount was left for me to save and invest which I have done. After that I am left with an annual pension of £16500 and a small annuity of £560 a year before tax. I have an updated state pension forecast of £119.54 a week payable from the age of 66.(Contracted out for most of working life) I am currently 58 going on 59.


I am currently working on a fixed 10 month part-time contract at the same school in order to complete exam groups without disruption for the students. I started a new pension with the TPS as I didn't want to miss out on the employer contributions and other benefits. I understand as I am only working for a short time any additional benefits will paid as a small annuity from TPS. No issues with that as even an extra £20 a month for life is a good deal. This additional year of working will also add another £4.45 a week to my state pension.


So in today's money at the age of 66 I will have income of about £23500 which is fine for someone with no debt or dependants. I can manage very well on the teacher's pension plus small annuity from age 59 to 66. I also have my saved and invested lump sum as back up. Anyone interested in what I have done with my lump sum and my plans for retirement are welcome to read this thread I started in the Over 50s Money Saving Forum
https://forums.moneysavingexpert.com/discussion/5559554


Now to the main point of my post. For a number of years I also undertook dinner duties for a nominal sum per day that was also pensionable (Local government scheme). The income paid every so often was a useful bonus. Anyway as a result I now have a very small Local Government pension that currently says it will pay £51 a year from the age of 65 and a lump sum of about £132. I get statements every year and it rises with CPI. Is there anything I could do with this pension to make it more useful to me? Could I do any of these

1. Ask for a transfer value and transfer it to my new teacher's pension or another pension platform.?
2. Cash the pension in (I realise we are talking a small amount)?

Any advice or comments most welcome. Thank you.

xylophone

You could check with TPS whether a transfer in would be accepted.

http://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/the-right-choice-for-me/taking-a-small-pension-as-a-cash-lump-sum

A "small pot" might be a possibility?

Consider voluntary Class 3 contributions to increase your state pension.

http://citywire.co.uk/new-model-adviser/news/steve-webb-how-to-boost-new-state-pension-payments/a827032

System

Many thanks for the links. Having had a quick I think my current pension entitlements may rule out trivial sum options.
I will consider additional NI contributions but at the moment it is not a priority in my plans.
Thanks again.

xylophone

"Small pot" not TC. if the value is £10,000 or under. See link.

You may be able to take the whole of your pension as a small pot if:

you’re aged at least 55, or you are retiring at an earlier age because of ill-health; and
the value of your pension arrangement does not exceed £10,000.

Unlike trivial commutation, you do not have to take into account any other defined pension benefits you may have, when giving up a pension for a small pot. The Government will allow you to give up three pension arrangements under the small pots rule.

System

Many thanks for clarifying the point so well. I will look into this as a possible solution.

Silvertabby

xylophone is right - the LGPS may pay a 'pot' of under £10K as a one-off lump sum as long as you don't have any other LGPS benefits with other Local Authorities.

BUT - this only applies to post 2008 leavers. If your LGPS benefits were deferred before this, then your only options are the small pension and lump sum or a transfer to a private pension.

Second BUT - a small number of LGPS schemes don't offer triviality full stop due to the loss of spouse's benefits and having to rely on member's declarations re other pensions (people just see £ signs and ignore the Ts&Cs) A scan through your scheme guide should tell you if they do or don't.

System

I have written to the pension fund requesting if I can take money as small pot or transfer to my 'new' teachers pension. I will also phone TPS next week to discuss if a transfer is possible.

System

I have been informed by the pension fund that I cannot take my pension as a 'small pot' cash payment. My next port of call will be the TPS to ask if I can do a transfer into my 'new' teachers pension. I have asked the pension fund to provide a transfer value. If that is not possible I look forward to the lump sum 0f £132 and annual pension of £51 a year from the age of 65!

System

Just an update on this thread. In September 2018 I began a fixed term teaching contract in a local school and also started a new teacher's pension in the career average scheme.
I enquired if I could transfer my very small LGPS pension due at 65 into this new scheme. I am pleased to say that I am allowed to do so. After a couple of weeks of collecting information and completeing the paperwork I sent everything to the TPS.
Just been informed that process is underway and I should hear more in about two weeks. I am pleased with outcome.

System

Would also like to mention that I decided to come out of full retirement after just a few months! Currently planning to do some part-time teaching for a few more years as well as examination invigilation. I will also ensure I pay all the necessary NI contributions either through salary or voluntary payments until April 2024.
As a result of this my retirement income at the of 66 is now looking to be (in current figures) about £28000 a year from 2024. This will be made up of original teachers pension, the one I am currently contributing too, my AVc annuity and state pension. I may also carry on with exam invigilation which brings in enough for an annual holiday !
At the moment I am working to build up my savings and investments so that I have a decent (for me) back up. Feel much more positive now about things.
I may not scale the heights of many of those on this forum but quite pleased I have managed to sort myself out!

Linton

Have you any years when you did not pay NI? If you paid voluntary contribution for those years the extra SP would pay off the cost in 3-4 years.