Teacher pension

havingaball74

Hi all,

Appologises if I am repeating a thread.

I am 44 years old and have 18 years in my teacher pension.

In theory I would like to retire at 57.

At 57 I would therefore stop paying into the TPS and then access it at 60 or 65. This would reduce actual reduction as I’m not taking it early. Does it work that the longer you delay taking it, the more you get when you do, even though you are not paying in still?

In order to retire at 57 I have some savings and investments but should I also open a SIPP to fund my early retirement or should I purchase added years through the TPS to receive in income between 57 and 60/65?

Thanks in advance.

Dazed_and_confused

Normally yes but only by virtue of any inflation increase.

You would need to check your scheme details to see what they do, CPI, RPI etc.

And there is of course the possibility that when you are 57-60 the inflation increase is zero.

xylophone

If you leave teaching at 57 your pension becomes deferred - ee

https://www.teacherspensions.co.uk/members/working-life/deferring-your-pension.aspx

and download the guide.

dunstonh

Does it work that the longer you delay taking it, the more you get when you do, even though you are not paying in still?

Its a calculation using assumptions. Yes, the longer you leave it, the higher that first year income will be (and thereafter). However, you have missed x years of payment. So, you need to calculate the breakeven point. i.e. £8000 p.a. paid at 57 vs £10,000 p.a. paid at 60; £10k is higher than £8k. However, you have been paid three years of £8k+ annual increases. So, for x number of years, taking it early is the option has paid the most to you. However, over time, the £10k option will be catching up and will pass it at some point. If it passes when you are in your 80s, you may think taking it early is better. If it passes when you are in your low to mid 70s, then leaving it may be better. Your health could be an influence on your decision too. You also have to consider what alternatives you have to funding any gap between 57 and 60.

Effectively, you have to spreadsheet calculate the various options to find the various breakeven points and then factor in personal circumstances.

havingaball74

Thank you! I understand now. How do teachers fund that gap? Are added years better or setting up a SIPP?

eastcorkram

What is the earliest age the pension can be taken without being reduced?

Silvertabby

eastcorkram wrote: »

What is the earliest age the pension can be taken without being reduced?

I depends on your age/dates of service.

If you are a youngster, and have just joined TPS, then the answer would be the same as your State pension age.

Bear in mind that's normal retirement - different rules may apply in the case of redundancy or ill health.

Oliver1191

I would definately open a sipp to help fund the gap.

I would also start ploughing money into an isa. Few teachers stay in the game for long once they pass 50. You might want to increase your options for whatever the future may hold (especially as schools radically change during that time - what might be a good place to work now may not be then!).

Should you decide to reduce your hours in the future, i believe supply teachers can build a pension too...might be worth considering it as part of your range of options post 50.

Hope that helps!

zagubov

What are your colleagues doing?

What does your union recommend?

What do the Teachers Pension Agency project as your income and what do their advisors say?

You should find out from their website what your NRA (normal retirement age) is and be aware that you might lose 3-4% of your pension for every year early you take your pension.

You might want to do work afterwards. Make sure you have a gap where you're receiving our pension first.

OldBeanz

In general, taking a HMG pension early is not seen as a good idea as the % the pension is reduced is not in your favour.
The options most go for are AVC's which come off your salary and you can take anytime after 55 but have restricted investment options or a PP/SIPP.

Johnnyboy11

OldBeanz wrote: »

In general, taking a HMG pension early is not seen as a good idea as the % the pension is reduced is not in your favour.

Worth pointing out that the % reduction would be mitigated by the OP paying no income tax on the first £11,850 (personal allowance) of the TPS pension from age 57, until the state pension kicks in. Assuming of course the OP has no other source of income over that period.