Teacher pension or higher salary dilemma

Pennypanj

Hi, I currently have a f/t paying £37500 p/a which has the benefit of me paying into the teacher pension scheme. I am 48 years old and have been in this role since 2010. 
However, I have been offered a new job at £45000 but which does not meet the teacher pension criteria. 

Should I stick with my current, lower paying role + TP or take the new, higher paying role?? 
🤔

Pablo7474

Well that would be depend on your circumstances so not something anyone can answer. Have you already met your pension needs? Do you need a higher income? Do you have other assets? What is pension deal in new role? 

Anonymous101

There's a couple of ways to look at this.
The easiest is in pure monetary terms. Assessing the benefit of the teacher pension should be very easy, likewise whatever pension is on offer from the new role. You can then assess this against the uplift in salary.

The other way to look at it is in terms of enjoyment. How are you feeling about your current role vs the possibility of a new role? What about all the other aspects. Commute, working hours, colleagues? There's lots of aspects to a job not strictly the money... and even the value of money changes over time and depends on how wealthy you are.

MX5huggy

The accrual rate on the TPS is 1/57 (unless you’ve gone enhanced). So £657 per year of pension from 67 (if that is retirement age). 

You pay 8.6% your employer pays 23.68% for this so £12105 per year. 

If you say you can safely withdraw 4% of a DC pot per year then to get £657 you need a pot of £16425. But the teacher pension is index linked so if inflation runs at a conservative 2% you will actually get £938 per year for life to cover that you need £23460 in the pot when You hit 67. If you can get 6% growth then you need to put £8218 in the pension this year. 4% growth needs £11579, to get a pot of the required size. Similar figure to what is currently contributed to your pension.

How much of your £45k that costs you depends on the contributions from the employer  and what their scheme is or if they offer Salary Sacrifice.

dunstonh

Hi, I currently have a f/t paying £37500 p/a which has the benefit of me paying into the teacher pension scheme. I am 48 years old and have been in this role since 2010. 
However, I have been offered a new job at £45000 but which does not meet the teacher pension criteria. 

Effectively you would appear to be taking a pay cut if you look at it as a costing of the overall package.  If the new employer pays around 20%-25% of your salary into your pension (not including your bit) then its matches the TPS.

hyubh

MX5huggy said:

The accrual rate on the TPS is 1/57 (unless you’ve gone enhanced). So £657 per year of pension from 67 (if that is retirement age).

Don't forget the revaluation rate for active members is above inflation...

MX5huggy

hyubh said:

MX5huggy said:

The accrual rate on the TPS is 1/57 (unless you’ve gone enhanced). So £657 per year of pension from 67 (if that is retirement age).

Don't forget the revaluation rate for active members is above inflation...

It all points to £45k not being enough to equal the current salary plus Teacher Pension especially if the new job is just minimum pension 3% employee and 5% employer which I think doesn’t even need to be paid on the first £6k ish. 

Marcon

Pennypanj said:

Hi, I currently have a f/t paying £37500 p/a which has the benefit of me paying into the teacher pension scheme. I am 48 years old and have been in this role since 2010. 
However, I have been offered a new job at £45000 but which does not meet the teacher pension criteria. 

Should I stick with my current, lower paying role + TP or take the new, higher paying role?? 
🤔

Pensions may be important but they shouldn't be the deciding factor for someone of your age (i.e. with plenty of  working years ahead of them) unless absolutely everything else is equal. The fact that you're looking for a new job suggests that may not be the case. 

What pension provision does the potential new employer offer? Would they consider a higher salary, given that you are effectively taking a pay cut UNLESS they are offering a really hefty pension contribution?

Nebulous2

What are your plans to retire? 

I had the same issue, from the opposite side! 

10 years ago,  at about your age, my employer took us out of the lgps pension scheme to save money. I moved job and took a drop in salary comparable to the one you describe to get back in. 

That 10 years helped put the icing on the cake as far as pension was concerned and I retired earlier this year at 59. I was fortunate in getting a minor promotion about 3 years ago and a regrading a year ago, which helped the calculation on final salary. 

If you are planning an early exit I'd cling on to the TPS. 

SouthCoastBoy

Personally I would not take a position purely based on the merits of the pension (I may not even get to pension age), I would consider the role in terms of career progression, is it more interesting, does it meet my work life balance expectations, will I learn new skills etc.

I have changed roles numerous times and never once has the decision been based on the pension being offered been near the top of my priorities, if it was I would have moved to the public sector long ago.

MaxiRobriguez

SouthCoastBoy said:

Personally I would not take a position purely based on the merits of the pension (I may not even get to pension age), I would consider the role in terms of career progression, is it more interesting, does it meet my work life balance expectations, will I learn new skills etc.

I have changed roles numerous times and never once has the decision been based on the pension being offered been near the top of my priorities, if it was I would have moved to the public sector long ago.

Absolutely.

Do the job you want to do, you spend enough time there, it has to be something you *want* to do or at least can tolerate.

After that you can start to look at the package to determine if it's worth a move.