Teacher Pension Queries

tonyg_2

Just checking whether this forum is still active? I have a specific question about the Teachers Pension. Thank you.

Dazed_and_C0nfused

tonyg_2 said:

Just checking whether this forum is still active? I have a specific question about the Teachers Pension. Thank you.

Yes, still lots of activity.

RobfromCornwall

Hello

I'm in a similar (but different) situation to the OP in that I have 12 years of service in teaching and have been in the TPS for the entire time.  I would never opt out.  My salary is about 50k.  I've used the pension calculator which was helpfully linked to earlier and got an annual pension figure in today's money that looks very favourable and suggests I should be in a good place when I retire (I am currently 35).  

What I'm trying to figure out is whether there's any real point in having a SIPP in addition to my TPS, or whether there are any downsides to doing so.  I've opened one with a tiny amount in currently, and instinctively feel that using it for long term savings rather than a conventional savings accounts could be a useful thing to do, and might provide a relatively small top up to both my teachers' pension and my state one.  Does this seem to be a sensible approach?  Is there anything that I might have missed or not thought about?  I am debt free and own my own home mortgage free.

Thanks in advance for any thoughts and ideas.

cobson

Flexibilities would probably give a better return than a SIPP, but if you are looking at early retirement and need to fund the gap between stopping work and getting the state pension then a SIPP could be useful as you are free to withdraw as much as you like, whereas your teacher's pension is fixed.

Dazed_and_C0nfused

RobfromCornwall said:

Hello

I'm in a similar (but different) situation to the OP in that I have 12 years of service in teaching and have been in the TPS for the entire time.  I would never opt out.  My salary is about 50k.  I've used the pension calculator which was helpfully linked to earlier and got an annual pension figure in today's money that looks very favourable and suggests I should be in a good place when I retire (I am currently 35).  

What I'm trying to figure out is whether there's any real point in having a SIPP in addition to my TPS, or whether there are any downsides to doing so.  I've opened one with a tiny amount in currently, and instinctively feel that using it for long term savings rather than a conventional savings accounts could be a useful thing to do, and might provide a relatively small top up to both my teachers' pension and my state one.  Does this seem to be a sensible approach?  Is there anything that I might have missed or not thought about?  I am debt free and own my own home mortgage free.

Thanks in advance for any thoughts and ideas.

Extra pension contributions are rarely a bad think.

If you are a basic rate payer now and in retirement you will get a 6.25% advantage from a SIPP over say a S&S ISA.  And possibly more.

Rather than being used as a small top up to your DB and State Pension another option is to use the SIPP as a bridging pension.

Say you have a NPA of 68 for both TPS and State Pension but by 65 are ready to retire and would prefer to avoid an actuarially reduced Teachers Pension.

You can drain the whole of your SIPP over that 3 year period, ensuring you make use of your Personal Allowance and then live off your Teachers and State Pension from 68.

RobfromCornwall

Dazed_and_C0nfused said:

RobfromCornwall said:

Hello

I'm in a similar (but different) situation to the OP in that I have 12 years of service in teaching and have been in the TPS for the entire time.  I would never opt out.  My salary is about 50k.  I've used the pension calculator which was helpfully linked to earlier and got an annual pension figure in today's money that looks very favourable and suggests I should be in a good place when I retire (I am currently 35).  

What I'm trying to figure out is whether there's any real point in having a SIPP in addition to my TPS, or whether there are any downsides to doing so.  I've opened one with a tiny amount in currently, and instinctively feel that using it for long term savings rather than a conventional savings accounts could be a useful thing to do, and might provide a relatively small top up to both my teachers' pension and my state one.  Does this seem to be a sensible approach?  Is there anything that I might have missed or not thought about?  I am debt free and own my own home mortgage free.

Thanks in advance for any thoughts and ideas.

Extra pension contributions are rarely a bad think.

If you are a basic rate payer now and in retirement you will get a 6.25% advantage from a SIPP over say a S&S ISA.  And possibly more.

Rather than being used as a small top up to your DB and State Pension another option is to use the SIPP as a bridging pension.

Say you have a NPA of 68 for both TPS and State Pension but by 65 are ready to retire and would prefer to avoid an actuarially reduced Teachers Pension.

You can drain the whole of your SIPP over that 3 year period, ensuring you make use of your Personal Allowance and then live off your Teachers and State Pension from 68.

Thank you, that's reassuring and helpful.

I had not considered the idea of the SIPP being a bridging pension.  With that in mind, I suppose my next challenge is to work out how much I would need to pay in monthly (or in total) to have enough to - for example - bridge the gap between 65 and 68 (or even better 60 and 68).  Any thoughts on how I can work this out?  I can see lots of calculators, but I can't find one that will quite do that. 

(Edited spelling error)

kuratowski

Hi @RobfromCornwall, I think you should be able to get the Aviva retirement planner to do that for you:

https://www.aviva.co.uk/retirement/tools/my-retirement-planner/

This tool is primarily geared towards DC pots, but it does take into account any DB pensions you tell it about and it will factor in the state pension too.  I think you could use it as follows:

• enter your current age and existing DC pot (SIPP)
• enter a guess of how much you will pay in each month
• tell it about your predicted TPS pension at age 68 (in today's money)
• set your target retirement income equal to TPS + SP
• set your retirement age to age 65

Then it should automatically use your DC to bridge the gap between 65 and 68.  You will be able to see whether it works, or whether you run out, and adjust your monthly contributions accordingly.

The growth assumptions it uses are (I believe) the FCA ones, so they're fairly cautious, but of course nothing is guaranteed.  As Dazed said, extra pension contributions are rarely a bad thing, it's better to overshoot than to undershoot...

RobfromCornwall

@kuratowski

This is amazing - just the kind of thing I was looking for.  Thank you.