Gazing into the future

Spreadsheet_Addict

Hi, After developing a recent obsession with pensions, I've been working out a number of scenarios for myself and my wife (who is in the TPS,) based on us retiring at different ages. I've found the teacher's pensions website contains a number of calculators, the best of which is excellent and can give you estimates based on age, length of service, actuarial reduction for taking early etc. It should be very useful in calculating future benefits.

Apologies for being unable to post the URL - I'm a new forum member.

bostonerimus

Silvertabby wrote: »

Class 2 is being abolished from 2018. You would have to pay voluntary Class 3 - approx £750 per year for a State pension of approx £4.50 per week/£235 per year for life. It could still be a good deal, though, depending on how long you live post State retirement age.

You beat me to it.....yep Class 2 is going away, but if you become an expat you can still pay Class 3. HMRC are very good about sending you bills. I've been paying voluntary NI as an expat for 30 years and it's one of the best financial decisions I ever made.

captainreckless

Class 3 NI contributions seem like a good idea. By a happy coincidence, they cost roughly the same amount that I put into the SIPP last year. I've been wondering about what to do with this money when living abroad. Paying NI contributions would seem to take care of that nicely.

kidmugsy

Silvertabby wrote: »

Class 2 is being abolished from 2018. You would have to pay voluntary Class 3 - approx £750 per year for a State pension of approx £4.50 per week/£235 per year for life. It could still be a good deal, though, depending on how long you live post State retirement age.

The £750 is present day money. The £235 p.a. will be however high index-linking takes it. Even if inflation is zero for three decades (ho, ho) the pension will pay for the contribution in just over three years. If you want to guess at tax rates, call it four years. That is a remarkably fine deal. The cost is that the £750 isn't invested in (say) equities or property in the meantime. The answer to that is to invest other cash in those.

bostonerimus

kidmugsy wrote: »

The £750 is present day money. The £235 p.a. will be however high index-linking takes it. Even if inflation is zero for three decades (ho, ho) the pension will pay for the contribution in just over three years. If you want to guess at tax rates, call it four years. That is a remarkably fine deal. The cost is that the £750 isn't invested in (say) equities or property in the meantime. The answer to that is to invest other cash in those.

Think of the deal if you've been paying the lower Class 2 NI rate. Last year the cost was around £145. It is such a low rate for the benefit it buys that it was about time it was abolished.

bigadaj

bostonerimus wrote: »

Think of the deal if you've been paying the lower Class 2 NI rate. Last year the cost was around £145. It is such a low rate for the benefit it buys that it was about time it was abolished.

Pulling up the ladder?

Terron

My sister has just retired from teaching, but next term will be covering a paternity leave. She took a break for several years whilst her children were growing up then returned parttime for several years. It seems to be a profession you can dip in and out off, and thus gives you the flexibility to try other things.

jamesd

bigadaj wrote: »

Pulling up the ladder?

Used to not count for state pension years for the self-employed it is intended for. Does now so makes sense to adjust for the higher benefits it now buys. Still some things the self-employed don't get, though. Also a useful move to reduce the NI avoidance incentive to be self-employed a bit.