55 and wanting to save 1,000 a month!

dont_use_vistaprint

Do you work in Education or an Educational Charity that pays into LGPS ?

Albermarle

Would 5 years not be a bit too short team for S&S?

It would also normally be too short a time frame for investing in a separate pension .
Although in both cases the risks could be lessened by only investing in funds at the lower risk/return end.

Ms_Monkey

Have you obtained a new state pension forecast?

https://www.gov.uk/check-state-pension
YES I HAVE - MANY THANKS
Is PP offered as a workplace pension rather than as an individual personal pension?

PP? SORRY, UNSURE WOF WHAT YOU'RE REFERRING TO. MY EMPLOYER PAYS INTO MY TEACHERS PENSION (AND I HAVE PAID INTO ADDITIONAL TEACHERS PENSION).

Had you thought of a simple stakeholder?
NO - I'M FEARFUL THAT 5 YEARS WON'T AMASS MUCH IN TERMS OF A PENSION? THOUGHTS?

Ms_Monkey

dont_use_vistaprint wrote: »

Do you work in Education or an Educational Charity that pays into LGPS ?

Thank you. I work at a university that pays into Teachers Pension on my behalf

Audaxer

Ms_Monkey wrote: »

H! - I'm 55. I'm single & pay into a workplace pension but started late (only 5 years ago). I own my own home & am debt free with very low out-goings. I can save £1,000 a month & am happy to tie it up for 5 years but then may need to access it as don't think i can carry on working full-time in my 60s. Any advice about where to put my money will be greatly appreciated. Occasionally, i may be able to go up to £1250 a month. Thank you.
p.s I can't contribute anymore to my workplace pension

Although you cannot pay more into your workplace pension, you can open a SIPP (Self Invested Personal Pension), and pay in up to the amount you earn. So assuming your salary less workplace pension payments is more than £12,000 per year, you can pay the £1,000 per month into the SIPP and get 25% tax relief added - that is £250 added each month. If you retire at say 60 and your income is well below the personal tax allowance (up to £12,500 from April) you could take an income from the SIPP without paying any tax. You can even leave the money as cash in the SIPP if you don't want to invest it. You get next to no interest, but you are getting 25% tax free on contributions.

xylophone

NO - I'M FEARFUL THAT 5 YEARS WON'T AMASS MUCH IN TERMS OF A PENSION? THOUGHTS?

But the People's Pension is a pension!

You could open a SIPP and not invest at all, just keeping your contributions in cash and regarding the tax relief in the light of generous "interest".

At the end of five years you could take a tax free pension commencement lump sum and draw down as best suited your tax position.

https://www.hl.co.uk/partners/search/sipp?theSource=PCHLS&Override=0&adg=G+HLBS+HLS&gclid=EAIaIQobChMI4a3nqLO53wIVy7vtCh04EgtMEAAYASAAEgLTGfD_BwE

If a person earned eg £20,000 a year and had made a gross contribution of (say) £5000 to the occupational pension, he could make a net contribution of up to £12000 to a SIPP and receive up to £3000 in tax relief.

jamesd

It's worth thinking more about pensions because now you're 55 you're allowed to do something like this:

1. Pay £12000 into a pension and get £3000 added to give you basic rate tax relief putting £15000 total into the pension.

2. Take a 25% tax free lump sum of £3750 out of the pension and place the rest into flexi-access drawdown but leave it to grow. Do not take any of the taxable 75%, £11250, because once you do your contributions to personal pensions including AVCs will be capped at £4000 a year. Do not exceed £7500 of tax free lump sum taken out per rolling 12 month period (not tax or calendar year) without asking for more guidance, it's one of the limits on some anti-recycling rules, often the most restrictive.

That in effect reduces the monthly cost of getting £11250 taxable into the pension to ( 12000 - 3750 ) / 12 = £687.50 so you can afford to put more into the pension.

While five years is often used as a minimum threshold you're unlikely to need all of the money at once so your planned horizon looks OK if that's true. You can also use a mixture of investments and if necessary draw first from the ones that move up and down least.

The usual limit on pension contributions is the lower of £40000 or your gross pay. So by paying the maximum into TPS do you mean that you've hit one of those limits?

The TPS AVCs do potentially let you do this rapid taking out of 25%, though maybe having to transfer first. You aren't necessarily compelled to take AVC money when you take the main defined benefit pension. But this is depends on the rules of your specific scheme and these restrictions could be present. Knowing what your scheme allows is vital and could make AVCs a poor choice for early retirement plans. Or a good one, depends on the rules.

While five years might not seem a lot, say you were to get no growth and accumulate just 5 x 11250 = 56250. The state pension is typically around 8000 a year and drawing down that 56250 would let you defer claiming it for 56250 / 8000 = 7 years. Each year of deferring adds 5.8% increasing with inflation for life to the state pension, so 7 x 0.058 x 8000 = 3240 a year.

Of course you can do other things or some combination. People tend to spend less as they get older so you could draw more than 8000 and defer less. Or you could fund retiring a year or two sooner. Or assuming a state pension age of 67 retire 7 years before that on 56250 / 7 = 8035. But because of the 25% trick you can get more than that.

I don't know what the restrictions on the TPS AVC are, they might not be as flexible, worth investigating in case less into AVCs and more elsewhere looks like a good idea.

colsten

jamesd wrote: »

The state pension is around 8000 a year and drawing down that 56250 would let you defer claiming it for 56250 / 8000 = 7 years. Each year of deferring adds 5.8% increasing with inflation for life to the state pension, so 7 x 0.058 x 8000 = 3240 a year.

The state pension may or may not be around £8,000 - it depends entirely on the OP's NI contribution record. The OP has done the right thing in getting a personal state pension forecast but hasn't shared with us how much the forecast is for.

We also don't know how much the Teacher's pension is likely to pay, so assumptions on deferring the state pension could be misplaced. The OP might want, or need, to draw her state pension as soon as she can get it. As the state pension age is 67 for anyone now aged 55, that is some 12 years away. A lot can happen in 12 years, incl. a change in the interest rate for deferrals.

dont_use_vistaprint

a

Ms_Monkey wrote: »

Thank you. I work at a university that pays into Teachers Pension on my behalf

One option I have seen quite a few people take when they have had enough of teaching or lecturing is a move to a senior position in a standard setting body, certification or awarding charity, examination boards etc. Many are in the 3rd sector like SSC's , SSB's but also many in the Civil service like SfA, OfStead, Ofqual, etc. Many of these not only continue your LGPS, but they count your service to education, so typically you start on the max 30 or 35 days leave, flexi/home based with a few sector meetings etc , 60-80k quite cushy for a few extra pension years. Obviously if you drop to part time you need to exit within a few years or it adversely affects your pension.

Zero_Sum

dont_use_vistaprint wrote: »

a

One option I have seen quite a few people take when they have had enough of teaching or lecturing is a move to a senior position in a standard setting body, certification or awarding charity, examination boards etc. Many are in the 3rd sector like SSC's , SSB's but also many in the Civil service like SfA, OfStead, Ofqual, etc. Many of these not only continue your LGPS, but they count your service to education, so typically you start on the max 30 or 35 days leave, flexi/home based with a few sector meetings etc , 60-80k quite cushy for a few extra pension years. Obviously if you drop to part time you need to exit within a few years or it adversely affects your pension.

OP has stated a number of times they're in the TPS. Why do you keep going on about the LGPS?