Early retirement

JO2025

Hi all! Hoping you may give me some ideas on whether it's worth taking some (a small lump sum) of my pension at 55 to clear a few debts (and save on interest) and then invest the sum into an investment. My teacher's pension is not going to earn anything sitting there as it ended a few years ago when I went self-employed. It seems like it may be worth taking it early and using it invest elsewhere. 

Bostonerimus1

What is this pension of which you speak? DB or DC? How is it calculated or invested and what are the implications of taking a lump sum from it? What is the interest rate on your debts and how would you invest your money?

Marcon

JO2025 said:

Hi all! Hoping you may give me some ideas on whether it's worth taking some (a small lump sum) of my pension at 55 to clear a few debts (and save on interest) and then invest the sum into an investment. My teacher's pension is not going to earn anything sitting there as it ended a few years ago when I went self-employed. It seems like it may be worth taking it early and using it invest elsewhere. 

If you are in the TPS, you are in a defined benefit (DB) scheme. 

Not sure what you have in mind when you say 'a small lump sum' - you can't take out chunks from a DB scheme in the way you can with a defined contribution pension scheme. 

If you take your TPS early, be aware it will be substantially reduced because you are taking it much sooner than the scheme's normal retirement date, and it will therefore be payable for longer.

It increases automatically from the time you leave 'active' (contributing) membership of the scheme until you access your TPS benefits, so you are guaranteed that it will increase.

Phossy

 Your pension will still be growing year on year even though you are not contributing any more. If it is a final salary (Defined Benefit/ DB) pension then you can only take the lump sum if you are putting the pension into payment. If you haven't already done it, I'd suggest you go onto the Teachers Pension site and pull your details and if you are comfortable to, then post them on here so people can give appropriate guidance.

SVaz

Taking a lump sum from a Teacher’s pension at 55 will severely reduce your pension later on and it means taking a monthly income immediately which will be taxed. 

It’s not just sitting there doing nothing,  your yearly pension is increasing by either CPI or CPI+ 1.6% .