Confused about trivial commutation

lookstraightahead

I've come out of my teachers pension as it will be worth so little when I retire. I'm 56 and I have been given a quote that I can take out just over £10k (thus is all of it). I gather a small pot is something under £10k so I'm a few hundred pounds too much for that. 

I don't understand the trivial commutation rules / £30k rules. Is this per year or total of all other pensions? I've 'cashed in' a £40k pension earlier this year. Leaving it in isn't worthwhile to me as it will give me about £50 a month pension.

kaMelo

What about the death in service benefits it provides? That alone may make it worth remaining a member.

hyubh

lookstraightahead said:

I've come out of my teachers pension as it will be worth so little when I retire.

Your post is a bit difficult understand. Why do you say that...? Opting out is akin to taking a voluntary 30% cut in your take home pay.

hyubh

hyubh said:

lookstraightahead said:

I've come out of my teachers pension as it will be worth so little when I retire.

Your post is a bit difficult understand. Why do you say that...? Opting out is akin to taking a voluntary 30% cut in your take home pay.

Reading your previous thread...

https://forums.moneysavingexpert.com/discussion/6524310/lgps-and-teachers-pension#latest

... you have a big blind spot on the value of short term (but still vesting) public sector pension scheme memberships. If you go in and out of jobs and so are in and out of the LGPS and TPS half a dozen times, then it's very wrong to say that collectively they will be 'worth so little'. Admittedly you will have to pro-actively transfer each time to fully maximise their value, but if you do, it will come to much the same thing as being a continuous member of one scheme during the same time period - since that's how inter-scheme pension transfers within the public sector are intended to work.

Dazed_and_C0nfused

lookstraightahead said:

I've come out of my teachers pension as it will be worth so little when I retire. I'm 56 and I have been given a quote that I can take out just over £10k (thus is all of it). I gather a small pot is something under £10k so I'm a few hundred pounds too much for that. 

I don't understand the trivial commutation rules / £30k rules. Is this per year or total of all other pensions? I've 'cashed in' a £40k pension earlier this year. Leaving it in isn't worthwhile to me as it will give me about £50 a month pension.

I think it's safe to say you have almost certainly misunderstood some elements of the (gold plated) Teachers Pension scheme.

And you will now almost certainly be paying more tax than you were when you were a member of TPS.  A strange way of doing things really 😳

QrizB

lookstraightahead said:

I've come out of my teachers pension as it will be worth so little when I retire.

That's likely to be a terrible idea.

lookstraightahead said:

I'm 56

So in 11 years you'll reach State Pension Age. How much do you expect to need in retirement, and How do you expect to fund it?

Marcon

lookstraightahead said:

I've come out of my teachers pension as it will be worth so little when I retire. I'm 56 and I have been given a quote that I can take out just over £10k (thus is all of it). I gather a small pot is something under £10k so I'm a few hundred pounds too much for that. 

I don't understand the trivial commutation rules / £30k rules. Is this per year or total of all other pensions? I've 'cashed in' a £40k pension earlier this year. Leaving it in isn't worthwhile to me as it will give me about £50 a month pension.

Small pots is a concept which relates only to defined contribution pension schemes. TPS is defined benefit.

A DB scheme can be 'trivially commuted' if:

• the total capital value (as opposed to just annual payments) is under £10K; OR
• the total value of all your pension provision (ignoring state pension) is under £30K, including any you've already drawn/cashed in. You've already cashed in a £40K pension, so clearly you are way over the £30K limit.

So you can't trivially commute. 

How long a period of active (contributing) membership of the TPS did you have?

lookstraightahead

Ok thank you everyone. I'm leaving teaching in the summer. I have an lgps pension worth a couple of thousand a year (I'm still trying to get the correct figure). 

I'm not staying in teaching. What can I do with this pension?

I have a private pension for when I retire.

i appreciate I need pension advice I haven't been in teaching long enough for any value over the years. And I work part time so contributions aren't a very high. 

xylophone

What can I do with this pension?

If you get a job with a defined benefits pension, it may be possible to transfer the TPS into it.

https://www.teacherspensions.co.uk/members/faqs/working-life/transfers.aspx

Please be aware that since 6 April 2015 we’re unable to transfer your benefits to a Defined Contribution scheme, we can only make transfers to Defined Benefit schemes. 

Defined Benefit schemes promise to give you a certain amount each year when you retire. How much you get doesn’t depend on investments. Defined Contribution schemes are where money is invested by a pension provider and your pension depends on how much has been paid in, how long you’ve been paying in and how well the investment has done.

lookstraightahead

Marcon said:

lookstraightahead said:

I've come out of my teachers pension as it will be worth so little when I retire. I'm 56 and I have been given a quote that I can take out just over £10k (thus is all of it). I gather a small pot is something under £10k so I'm a few hundred pounds too much for that. 

I don't understand the trivial commutation rules / £30k rules. Is this per year or total of all other pensions? I've 'cashed in' a £40k pension earlier this year. Leaving it in isn't worthwhile to me as it will give me about £50 a month pension.

Small pots is a concept which relates only to defined contribution pension schemes. TPS is defined benefit.

A DB scheme can be 'trivially commuted' if:

• the total capital value (as opposed to just annual payments) is under £10K; OR
• the total value of all your pension provision (ignoring state pension) is under £30K, including any you've already drawn/cashed in. You've already cashed in a £40K pension, so clearly you are way over the £30K limit.

So you can't trivially commute. 

How long a period of active (contributing) membership of the TPS did you have?

Less than two years 

Silvertabby

You can't commute as your LGPS benefits alone are likely to be over the £30K trivial commutation limit.

Have I read your post right - ie, you are still a part time teacher but chose to opt out of the TPS?  If so, then the best thing you can possibly do will be to opt back in to the TPS.  PDQ.