Teachers Pension....Additional Pension

IAMIAM

Hi, 
If you want to purchase the maximum available (£7000), is it worth doing as £250 per annum and keep applying every year in £250/£500 per annum elections.
OR purchasing the full £7000 over say 15/20 years as an ongoing contract. Advice Please.
Thanks

JoeCrystal

No idea, check with your TPS administrator for both options and see how it compares.

EDIT: Also, it may be best to keep all your questions on a single thread as well. Ultimately though, your TPS administrators would be best placed to answer your question. If you want advice, then pay for an IFA to advise you.

IAMIAM

They both compare favourably. But wondered if anyone has any experience of the two scenarios. The 15/20 contract is more expensive slightly, but then the £7000 is being compounded straight away. The small yearly £250 increments are cheaper but then you are paying for it yearly and restarting yearly. Maybe I am after more of the admin/long term aspect advice wise. 

OldBeanz

Had that one with my son in 2017 and wondered how it worked out as it appeared cheaper to buy the maximum over 5 yearly deals rather than the maximum over 5 years as one deal. But you buy into the inflation proofing from the beginning so get inflation increases on the full amount if you buy as one deal. 
He took out the maximum 3 years ago (figures here and others in brackets, off the top of my head  £7k pa) over 5 years and was going to increase the amount inline with the rise last year to the maximum amount of added pension allowed (again off the top of my head now £7.5k pa) and was declined because the value of his additional pension with inflation was now (£7.3k) and you have to buy in (£250) chunks.
The other consideration is that this amount is payable at 68 while his pension age might rise.

IAMIAM

Great. I have proceeded to purchase the maximum I have available to me over 20 years (4.5k)

I have already purchased 3 year buy out, which has taken 2.5k from the 7k available, so in effect I will take all my main pension and this additional pension at 65 (albeit the APB will be actuarially reduced: but 4.5k will be around 7k when compounded at age 68, so no major concern this part being reduced slightly to age 65).
Having researched, it seems that if I stop work at 60 years and 1 day, I can have everything I have in my main pension at age 65 NOT reduced and the period between 60-65 (5 years less one day) is still calculated and increased as though I am in service, if you are out of service more than 5 years - it is not.
The reason I have done the 20 year deal is because I have found out that if you commit now to the full amount, if I were to have ANY ill health and stop working due to it, I still get the the full APB I committed to paying for, regardless if I am only 15 years into the deal.
The other thing I have also noticed is that if I paid for £250 per year and did a new contract every year, it becomes really expensive when you play around with your age online. Also the scheme valuation every four years will increase my premiums by 1-2% rather than what I thought was 5-10% which I can handle 4 times over the course of the 20 year commitment. 

Hope I have captured everything!

OldBeanz

IAMIAM said:

Great. I have proceeded to purchase the maximum I have available to me over 20 years (4.5k)

I have already purchased 3 year buy out, which has taken 2.5k from the 7k available, so in effect I will take all my main pension and this additional pension at 65 (albeit the APB will be actuarially reduced: but 4.5k will be around 7k when compounded at age 68, so no major concern this part being reduced slightly to age 65).
Having researched, it seems that if I stop work at 60 years and 1 day, I can have everything I have in my main pension at age 65 NOT reduced and the period between 60-65 (5 years less one day) is still calculated and increased as though I am in service, if you are out of service more than 5 years - it is not.
The reason I have done the 20 year deal is because I have found out that if you commit now to the full amount, if I were to have ANY ill health and stop working due to it, I still get the the full APB I committed to paying for, regardless if I am only 15 years into the deal.
The other thing I have also noticed is that if I paid for £250 per year and did a new contract every year, it becomes really expensive when you play around with your age online. Also the scheme valuation every four years will increase my premiums by 1-2% rather than what I thought was 5-10% which I can handle 4 times over the course of the 20 year commitment. 

Hope I have captured everything!

Yes it becomes dearer as you get older so getting the inflation proofing in early is the way to go. The increase the last time (2 years ago-ish) was quite horrendous, My son lives with us so was able to do this along with an early increasing salary but the payments went up somewhere in the region of (20% again off the top of my head but it was £600+ to £800+ less tax). It took the pension people an age to update the correct payments so he is reimbursing his school the money to cover the underpayment as well. The TPS offer the option to keep the payments the same (but to take over a longer time presumably) or decrease benefits.
Next thing is to fill in the 60-65 gap:)

IAMIAM

Wow, it really went up that much?! I rang and they said it never goes up by the that much?!?! I am beginning to think paying yearly for an extra £250 is the way to go now you've said that.

OldBeanz

IAMIAM said:

Wow, it really went up that much?! I rang and they said it never goes up by the that much?!?! I am beginning to think paying yearly for an extra £250 is the way to go now you've said that.

He is on holiday as we speak but will be back in a few days. I will find out the %. As stated though you can maintain the same payments - obvs with fewer benefits.