New pension query

Gers

I’ve been given an opportunity to auto-enrol in the Scottish Teachers Pension Fund (2015 scheme).

I work very part time, seven hours in semester one and three hours in semester two. I reach SPA in July 2019 and currently receive a LGPS pension.

I opted out of the previous offer of the NEST scheme and instead put equivalent monies into savings accounts.

Is it worth enrolling so late in the day? I am undecided about continuing teaching in academic year 2019-2020.

Thanks.

kidmugsy

Gers wrote: »

I opted out of the previous offer of the NEST scheme and instead put equivalent monies into savings accounts.

Why? Pourquoi?


(Does anyone else find the rule on minimum number of letters in a comment rather silly?)

woolly_wombat

Gers wrote: »

I opted out of the previous offer of the NEST scheme and instead put equivalent monies into savings accounts.

Why not put equivalent monies into a SIPP, then transfer the grossed up amount into your teacher's pension before the year is up?

Is it worth enrolling so late in the day? I am undecided about continuing teaching in academic year 2019-2020.

Thanks.

Is there a vesting period? Can you get around that by transferring your SIPP in if you decide not to continue?

Don't look a gift horse in the mouth!

cloud_dog

kidmugsy wrote: »

(Does anyone else find the rule on minimum number of letters in a comment rather silly?)

No xxxxxxxxxxxxxxxx

Gers

Why not the NEST scheme? It was very poor value and I didn't really expect to work on. I was planning on retiring at 60 years old and did, then got bored and wanted to fill up my SPA. That was done last year. See various threads if you have spare time!

I don't want or feel confident about private pensions /SIPPS and my finances are very healthy.

I suppose what I need to know is it worth enrolling for what may be nine or ten months only?

LHW99

is it worth enrolling for what may be nine or ten months only?

You get the employer's contribution. As has been said., you can always pay extra into a SIPP, for the tax relief, keep it in cash and transfer it into the TPS to buy extra within the time allowed as wooly_wombat suggests, and there is a 50% spouse / dependent pension attached (if that would be useful to your family)

Aretnap

Gers wrote: »

I suppose what I need to know is it worth enrolling for what may be nine or ten months only?

The teachers pension scheme is a defined benefit scheme which will give you a (small) monthly top up to your income for the rest of your life. Unless you're in unusually poor health for your age (I assume you're not if you're still working) the likelihood is that those payments will end up adding up to significantly more than the contributions you pay over the next nine or ten months. So by opting out you are effectively turning down free money (just as you did by opting out of your last pension).


Your argument seems to be that there's no point doing it, because it's not a lot of free money. That's as maybe, but a little bit of free money is still better than no free money.


In fact, as you have to make an active effort to opt out, your question should really be phrased as "is it worth going to the bother of opting out so that I can avoid receiving this small amount of free money". That's not really a puzzle that anybody should get wrong, to be honest...


On the other hand, speaking as a taxpayer I definitely think that you should opt out.

Gers

Thanks to all for the advice - which is all going one way! No point in asking and then ignoring. I'll opt in.

There's an option to have this backdated to September this year so will do that too, may as well stuff some more money into it before I make my mind up about properly stopping work. This decision is entirely down to the worsening health of my elderly mother, I live 100 miles away and am finding the demands of work and family rather difficult just now. Of course, if push comes to shove it's work which will be ditched.

I need to go away and get to grips with SIPPs and transferring in.

Thanks again.

EDIT to add some figures

For 2017/18 (1 Apr to 31 Mar), the STPS employee contribution rates for employees are as follows so you can work out how this will affect your salary:

Salary banding (FTE) Contribution rate
Up to £26,259 7.2%
£26,260 – £35,349 8.7%
£35,350 - £41,914 9.7%
£41,915 - £55,549 10.4%

We understand these rates are reviewed annually, and may change in the future. At present, the employer contributions are 17.2%, but these are to increase to 22.6% from 1 April 2019

.

NEST contributions are presently deducted from you at a rate of 3% net at source, whilst employer’s contributions are 2%.

Gers

Been looking online - the new (2015) scheme is:

Career Average Revalued Earnings (CARE)
Revalued annually by CPI + 1.6% (CPI only for preserved benefits)

So not a final salary scheme. Won't matter as I'm very part time!