NHS additional payments... is it worth it?

IAMIAM

OldBeanz said:

Somethings to note which applied to my son's pension in the teachers' scheme:
If you pay a lump sum into the pension you will only receive up to any tax you have paid in that year. This is unlike a personal pension where you can pay in up to 80% of your salary (less other pension contributions) and get tax relief.
The price of additional pension is based on your date of birth so will increase on your birthday. Worth sorting out before.
Inflation growth starts on the whole amount from day 1. So with the Teachers' Pension it looked cheaper to buy 10x£750 but it was better to buy £7500 over 10 years as inflation pension growth tipped the balance.

Does the APB get increased yearly by inflation only or by inflation plus 1.6%

IAMIAM

chucknorris said:

I have bought additional pension in the Teachers Pension Scheme (TPS) and I think that it is very good value, I have purchased the max allowed in the pre 2015 scheme, and I now use all my part time salary to buy more in the current TPS scheme, which I will continue to do so until I reach the state pension age (you can't buy it beyond that, and that may trigger my retirement, I would also be in the 60% tax band if I continued working). As mentioned above the cost depends on your age, the last purchase I made at 62 years old (a few months ago) was £16,520 (more because I'm a lot older than the OP) per £1,000 of pension purchased, which is approximately half the price of buying a similar index linked annuity. I am not a big fan of annuities, but I would be if they were half the price.

Did you pay monthly? Was there ever an increase in its cost?

chucknorris

IAMIAM said:

chucknorris said:

I have bought additional pension in the Teachers Pension Scheme (TPS) and I think that it is very good value, I have purchased the max allowed in the pre 2015 scheme, and I now use all my part time salary to buy more in the current TPS scheme, which I will continue to do so until I reach the state pension age (you can't buy it beyond that, and that may trigger my retirement, I would also be in the 60% tax band if I continued working). As mentioned above the cost depends on your age, the last purchase I made at 62 years old (a few months ago) was £16,520 (more because I'm a lot older than the OP) per £1,000 of pension purchased, which is approximately half the price of buying a similar index linked annuity. I am not a big fan of annuities, but I would be if they were half the price.

Did you pay monthly? Was there ever an increase in its cost?

I've done both, because you can only buy in multiples of buying £250 of pension (this is TPS, I don't know about the other schemes), to maximise what I was buying (using all of my salary) I used both. The price didn't usually go up during an agreed monthly arrangement (although it did vary (reduced) once because of the GOV changing from RPI to CPI), but if you bought over a number of years, the monthly cost is slightly more than paying by lump sum, because it factors in your increasing age during the contract period.

IAMIAM

chucknorris said:

IAMIAM said:

chucknorris said:

I have bought additional pension in the Teachers Pension Scheme (TPS) and I think that it is very good value, I have purchased the max allowed in the pre 2015 scheme, and I now use all my part time salary to buy more in the current TPS scheme, which I will continue to do so until I reach the state pension age (you can't buy it beyond that, and that may trigger my retirement, I would also be in the 60% tax band if I continued working). As mentioned above the cost depends on your age, the last purchase I made at 62 years old (a few months ago) was £16,520 (more because I'm a lot older than the OP) per £1,000 of pension purchased, which is approximately half the price of buying a similar index linked annuity. I am not a big fan of annuities, but I would be if they were half the price.

Did you pay monthly? Was there ever an increase in its cost?

I've done both, because you can only buy in multiples of buying £250 of pension (this is TPS, I don't know about the other schemes), to maximise what I was buying (using all of my salary) I used both. The price didn't usually go up during an agreed monthly arrangement (although it did vary (reduced) once because of the GOV changing from RPI to CPI), but if you bought over a number of years, the monthly cost is slightly more than paying by lump sum, because it factors in your increasing age during the contract period.

Thats interesting to know that the price never increased at all over an agreed period, can I ask if this was more than a 4 year window (coinciding with when the GOV recalculate pension liabilities and costs)

chucknorris

IAMIAM said:

chucknorris said:

IAMIAM said:

chucknorris said:

I have bought additional pension in the Teachers Pension Scheme (TPS) and I think that it is very good value, I have purchased the max allowed in the pre 2015 scheme, and I now use all my part time salary to buy more in the current TPS scheme, which I will continue to do so until I reach the state pension age (you can't buy it beyond that, and that may trigger my retirement, I would also be in the 60% tax band if I continued working). As mentioned above the cost depends on your age, the last purchase I made at 62 years old (a few months ago) was £16,520 (more because I'm a lot older than the OP) per £1,000 of pension purchased, which is approximately half the price of buying a similar index linked annuity. I am not a big fan of annuities, but I would be if they were half the price.

Did you pay monthly? Was there ever an increase in its cost?

I've done both, because you can only buy in multiples of buying £250 of pension (this is TPS, I don't know about the other schemes), to maximise what I was buying (using all of my salary) I used both. The price didn't usually go up during an agreed monthly arrangement (although it did vary (reduced) once because of the GOV changing from RPI to CPI), but if you bought over a number of years, the monthly cost is slightly more than paying by lump sum, because it factors in your increasing age during the contract period.

Thats interesting to know that the price never increased at all over an agreed period, can I ask if this was more than a 4 year window (coinciding with when the GOV recalculate pension liabilities and costs)

It was over 3 years, it doesn't increase because it factors in buying it at different ages as you have each birthday, in other words the annual increase (as your age rises) is built in already.

Dazed_and_C0nfused

OldBeanz said:

Somethings to note which applied to my son's pension in the teachers' scheme:
If you pay a lump sum into the pension you will only receive up to any tax you have paid in that year. This is unlike a personal pension where you can pay in up to 80% of your salary (less other pension contributions) and get tax relief.
The price of additional pension is based on your date of birth so will increase on your birthday. Worth sorting out before.
Inflation growth starts on the whole amount from day 1. So with the Teachers' Pension it looked cheaper to buy 10x£750 but it was better to buy £7500 over 10 years as inflation pension growth tipped the balance.

The different method of contributing has caught a few posters out, I think one didn't receive any tax relief at all.

But if the op is earning £26k (P60 taxable pay) and wants to contribute £9k as a lump sum then they should be ok.

chucknorris

OldBeanz said:

Somethings to note which applied to my son's pension in the teachers' scheme:
If you pay a lump sum into the pension you will only receive up to any tax you have paid in that year. This is unlike a personal pension where you can pay in up to 80% of your salary (less other pension contributions) and get tax relief.

You do get the full tax relief, when you submit your tax return you get the full relief by claiming it as a pension contribution where tax relief was NOT given, and instead of your basic tax allowance being extended, your tax free allowance is extended.

Dazed_and_C0nfused

Not much consolation if your pay say £9k as a lump sum and only earn £14k before normal pension contributions though.

Taxable pay might only be £13k+ with tax paid of very low hundreds of pounds.

IAMIAM

@chucknorris Thats good to know, if you don't mind me asking further!, how much has it increased in value since inception date....my main concern is it seems to only allow you to purchase it based on NRA of 68, meaning if you take it at 65 its reduced in value by 3 years. Albeit, I have heard you can do partial retirement, but unsure of how that works and whether that means you take your main benefits whenever and keep this part until you want it...

chucknorris

Dazed_and_C0nfused said:

Not much consolation if your pay say £9k as a lump sum and only earn £14k before normal pension contributions though.

Taxable pay might only be £13k+ with tax paid of very low hundreds of pounds.

Well the solution in that situation is to buy it over a number of tax years. It is a fantastic deal, try complaining to those in a DC employer's scheme and I imagine that most of their responses would be curt. £9k is a lot for someone to pay in one year from such a comparatively low salary, and saying as the max is only about £7.5k (I forget) and they are so young, there is no hurry, they can take their time, they have plenty of time.