Should I stay in Teachers Pension?

Partaloa38

I am 53 and just secured a permanent teaching position. The question: should I continue to pay into the teachers pension? It is a whopping£250 a month but I have a LGPS pension that I had paid into for 26 years previously which in theory I can take at 55. I know after 3 months I can't get any Teachers Pension refunded so I'm just wondering what the best thing is to do. Any thoughts. I will also have a full state pension when I'm 67. :rotfl:

hugheskevi

The question: should I continue to pay into the teachers pension?

Yes.

To turn the question around, why would you even consider opting out of what is widely regarded as one of the best pension schemes in the country - except for very high earners (Annual/Lifetime Allowance issues) or serious affordability issues, there is not going to be any reason to do so.

It is a whopping£250 a month

A fraction of the cost of providing the benefit, probably in the region of 30% of the total cost. So the more it costs to be a member, the more the benefit is (excepting the highest earners where things are different).

I have a LGPS pension that I had paid into for 26 years previously which in theory I can take at 55.

Consider whether a club or CETV transfer-in to the Teachers Pension would be beneficial for you.

xylophone

in theory I can take at 55.

With a substantial actuarial reduction?

And if you took the pension and continued in full time employment as a teacher you'd almost certainly be paying higher rate tax?

And you are aware that by opting out of TPS you would effectively be taking a pay cut since you'd lose the employer contribution?

Consider whether a club or CETV transfer-in to the Teachers Pension would be beneficial for you.

But remember that while transfers out of LGPS (DB) to a DB or DC Scheme are permissible, transfers out of TPS (DB) to a DC scheme are not.

And have you checked your state pension forecast?

https://www.gov.uk/check-state-pension

FatherAbraham

Partaloa38 wrote: »

I am 53 and just secured a permanent teaching position. The question: should I continue to pay into the teachers pension? It is a whopping£250 a month but I have a LGPS pension that I had paid into for 26 years previously which in theory I can take at 55. I know after 3 months I can't get any Teachers Pension refunded so I'm just wondering what the best thing is to do. Any thoughts. I will also have a full state pension when I'm 67. :rotfl:

£250/month is peanuts for what you'll get out of it.

You should compare it with being in a defined-contribution scheme with an average employer contribution - then you'll be biting your current employer's hand off to join the TPS.

Dazed_and_confused

Don't forget if you decide to opt out of contributing the £250/ month to this pension you will have to pay up to £150 additional tax each month.

ColdIron

The Teachers Pension Scheme, like your LGPS, isn't just gold plated, it's diamond encrusted. You'd be mad to ignore it

Oliver1191

Whilst in the scheme, you also get cpi + 1.6% added every year.

Invest your excess money in sipps and isas if you are planning on retirement over the coming years.

Also, if you're new to teaching at 53, you need to keep in mind that you may not survive long. Whilst i personally wish you the best, the reality is that people leave teaching rapidly. Most colleagues i know at that age struggle to keep up with the prevalent over-working culture (and rapidly face capability proceedings). The only real exception is those further up in leadership. It's not in all cases, but i've seen a lot of colleagues suffer with extreme stress if they remain class teachers. So i wish you the best and suggest staying in whilst you can. The opportunity wont come again.

justme111

As I see it the question does not make sense. Yes the scheme is great but what is right for you depends on your particular circumstances. How much money do you currently live on , when do you intend to retire , how much money will you need when you retire , what pension have you got so far.

enthusiasticsaver

Yes I would stay in the teachers pension scheme. It is one of the few DB schemes still left which gives you pension security, you are saving in the most tax efficient way possible and opting out is like taking a pay cut as you will miss out in employers contributions. You also would not save £250 a month as that is taken before tax so it is not actually costing you that much each month.

Taking a LGPS at 55 will be subject to a reduction so that may not be the wisest option. You should think about what age you want to retire and how much you will need to live off. Bear in mind that taking your pension early will reduce the amount you receive so you might want to think about how to fund the early years if you intend retiring before your NRD.

zagubov

Have you got dependants and a mortgage to pay off? The life insurance that comes with the TPS is extremely good.

It's difficult to know whether you should transfer your LGPS pension to the TPS as that may depend on how your salary's changing and what your potential salary increases may be in the future.

It's challenging job, despite many strongly held opinions about its easiness held by people whose heads are emptier than a hermit's address book. Also rewarding. Joining a union may be a way of getting info on what to do with your pension. Deffo look into that.

atush

Stay in the TPS.