TPS and USS advice please?

Yet_More_Puddylove

zagubov said:

Yet_More_Puddylove said:

Hi Zagubov
I am going to work FT after collecting TPS, but then gradually intend to reduce my work as I head towards 65.   My current employment is with a university - and TPS is not an option, only USS.

I'd be happy to pay more of my salary into either USS or a SIPP - as I said I'm a bit spooked by the rapid and unpredictable changes occurring with the US scheme at the moment so that's what I'd really like advice on.

Finally - I haven't heard of the 'one day rule' so I'll have a google - thank you.

The one day rule might just apply to TPS-eligible employment. If a worker receives a pension at their proper retirement age, they can continue their employment but mustn't earn more than their salary of reference, which would be calculated based on their last TPS-pensionable salary. If they do, their pension will be clawed back by the taxman to bring them back down to their salary of reference, and a big part of their pension is lost, This means unless they cut back their income they'll end up working at least part of their job for no real benefit. If you change jobs so you're outside the educational sector this doesn't apply. Those universities (possibly older ones) whose employees can't access the TPS might be safe but you need to be sure of this.

If your workplace is eligible for the TPS one loophole might be to take the pension before your retirement age, and receive an actuarially reduced (ie incomplete) pension, which you're committed t for life. The reduction/abatement may be minor, if say you retire just before your birthday, even if by one day, but it'll stay that way permanently. However, you can earn as much as you like without losing your pension, and your HR/payroll departments' paperwork becomes easier.

If you were continuing in a TPS eligible post you'd have to take a new post with a new job title and employee number, even if it's with the same employer after at least a day's gap of being out of work. I'm not sure whether you're in this position. Your union rep and the pension agency can give better info. As the TPS can't give financial advice (just like us) you'd better prepare your questions so they can be answered with yes or no. Good luck - it's worth investigating as it's easy to blunder into a situation where you miss out on earnig what you're capable of and/or receiving the penison you've paid into.

I appreciate your time in replying.   I see what you are saying regarding TPS.   If I continue working, I won't need the TPS money at 60 anyway, so perhaps the simplest plan is to wait until I am 65 and retire fully.

zagubov

Yet_More_Puddylove said:

zagubov said:

Yet_More_Puddylove said:

Hi Zagubov
I am going to work FT after collecting TPS, but then gradually intend to reduce my work as I head towards 65.   My current employment is with a university - and TPS is not an option, only USS.

I'd be happy to pay more of my salary into either USS or a SIPP - as I said I'm a bit spooked by the rapid and unpredictable changes occurring with the US scheme at the moment so that's what I'd really like advice on.

Finally - I haven't heard of the 'one day rule' so I'll have a google - thank you.

The one day rule might just apply to TPS-eligible employment. If a worker receives a pension at their proper retirement age, they can continue their employment but mustn't earn more than their salary of reference, which would be calculated based on their last TPS-pensionable salary. If they do, their pension will be clawed back by the taxman to bring them back down to their salary of reference, and a big part of their pension is lost, This means unless they cut back their income they'll end up working at least part of their job for no real benefit. If you change jobs so you're outside the educational sector this doesn't apply. Those universities (possibly older ones) whose employees can't access the TPS might be safe but you need to be sure of this.

If your workplace is eligible for the TPS one loophole might be to take the pension before your retirement age, and receive an actuarially reduced (ie incomplete) pension, which you're committed t for life. The reduction/abatement may be minor, if say you retire just before your birthday, even if by one day, but it'll stay that way permanently. However, you can earn as much as you like without losing your pension, and your HR/payroll departments' paperwork becomes easier.

If you were continuing in a TPS eligible post you'd have to take a new post with a new job title and employee number, even if it's with the same employer after at least a day's gap of being out of work. I'm not sure whether you're in this position. Your union rep and the pension agency can give better info. As the TPS can't give financial advice (just like us) you'd better prepare your questions so they can be answered with yes or no. Good luck - it's worth investigating as it's easy to blunder into a situation where you miss out on earnig what you're capable of and/or receiving the penison you've paid into.

I appreciate your time in replying.   I see what you are saying regarding TPS.   If I continue working, I won't need the TPS money at 60 anyway, so perhaps the simplest plan is to wait until I am 65 and retire fully.

Taking the TPS at 60 would at least allow you to pump an equivalent amount into your current pension, but could also offer you even more financial security in your final working years. While I assume that the missed pension income must surely be returned to you eventually, the TPS website is extremely opaque about how quickly and/or easily you can access any unclaimed pension money you didn't accept at 60. For example I'm not even sure the payments will be enhanced due to the shorter life expectancy of a 65-year old vs. a 60-year old, let alone have the missing years payment added in a tax-efficient way.

Are you entitled to a lump sum?

To be honest, I've never met anyone who delayed taking their TPS at their retirement age, except one person who didn't due to absent-mindedness after changing careers, and he was kicking himself for not taking the money back when he could have enjoyed it more. 

Maybe the TPS website can provide more answers. Plus maybe search this sub-forum in case this has come up in the past.