What would YOU do? Pensionwise

fimonkey

Retired_I.F.A. wrote: »

Never did get back to you on this one did I. Sorry. You should have nagged me, undestandable that you didn't though as your single

Ha ha, not single, but not a nagger either, too laid back which is why I've made it to 32 without sorting out a pension!

Thanks for your help, really appreciate it.

Dithering_Dad

Hi fimonkey, I've seen a few threads like this one recently, (I'm not sure whether you've posted elsewhere or if other people are in the same circumstances as yourself have posted) but I always think to myself "Why on earth work for an employer who treats you like this?"

While the work conditions at the private school may be much better (and perhaps the pay?), you're missing out on, to me anyway, one of the major financial incentives for being a teacher - namely the cast iron guaranteed pension!

I always say the same thing when people ask me why I'm so mad-keen on pensions. It's because I'm mad-scared of being poor when I'm too old to do anything about it! You can struggle through all sorts of tough financial times when you're young (I lived on beans on toast when I got my first house ) because you know that with a little hard-work you can sort yourself out. This isn't the case when you're elderly.

I guess what I'm trying to say in my usual rambly way is that you should seriously consider seeking a different employer because your pension is the single most important investment you will ever have.

Steppy

Hi Fimonkey,

I can see you have a tricky decision on your hands..

First I think you'll have to wait for an update from your employer to clarify what will happen if you don't contribute the extra short fall?

You also have to think about what's on offer here.. The TPS is a 1/60 final salary pension, this means you'll know exactly what you'll get by the number of service years you put in. Where the Stakeholder pension will very much depends on the stock market performance. To me the TPS 1/60 sounds like more of a guaranty...?

My thoughts are:

1. Clarify pension recieved on TPS 1/60 - 6.4% and 13.57% salary payments.
2. 7.17% pay drop seems reasonable to get guaranteed 1/60 pension.
3. Can you earn extra money by teaching extra lessons / give private lessons to make up the short fall?
4. Stakeholder pension - Find out / request forecast on money needed to pay-in to recieve the same money as the TPS penion at 65 (E.g. £15827 pa).
5. Mortgage - You can take an undisclosed income mortgage if you really need to later.

Cheers,

Steppy

Newly_retired

Is there any possibility of your changing schools? eg moving to a state school or an independent school which operates the TPS properly? It is a good scheme. Don't forget you may well get promotion before retirement which will mean your final salary is higher, therefore your pension is higher.

Retired_I.F.A.

Firmonkey, take no notice of dithering dad and newly retired,
YOUR EMPLOYER PENSION WISE IS FAR BETTER THAN WORKING IN A STATE SCHOOL. a fact you will soon realise when I 've double checked these sums and put it all down in writing.

Retired_I.F.A.

Oh yes I forgot. My regards to you unnagged other half. Lucky sod !

Dunno now what made me think you single

I'm getting tired now may as well go to sleep I've no fags left either :sad:


I'll leave all the final salary scheme lovers following this thread with this.

You know how you all think that the member pays a fixed percentage of his salary to the TPS and the employer makes up the difference so if investment returns are less than expected it's the employer who foots the bill ? (as I did till looking into the new TPS) thus how you all love it's "guarantee" well think on folks. if the scheme is underfunded as such there is just as much likelyhood that the employee will have to pay more too.

I'll guarantee you a million quid if you give me two million hahahahah

Andy_L

The TPS is an unfunded scheme. The government of the day is contractally obliged to pay the acruued pension promise. Whilst they could change the law to negate that contract they would:
a) Lose at EU/Internationl courts and
b) Lose financial/Contractal credability & have to pay a "poor credit risk" premium for evey thing they take from then on.

Retired_I.F.A.

The TPS scheme is funded but the funds are not invested.

I do have a tendency to get things wrong at 4:30 am, not through lack of sleep more a lack of nicotine.:D

I really ought to have said the employees 6.4% contribution rate can be increased as it's reviewed by the governments actuaries periodically.It is not a fixed contribution rate.

Dithering_Dad

Retired_I.F.A. wrote: »

Firmonkey, take no notice of dithering dad and newly retired,
YOUR EMPLOYER PENSION WISE IS FAR BETTER THAN WORKING IN A STATE SCHOOL. a fact you will soon realise when I 've double checked these sums and put it all down in writing.

I'll not hold my breath waiting for these figures then shall I?

Retired_I.F.A.

Almost done. (cant abandon the snooker can I ? )

Basically what I meant there DD was The virtually sole reason a final salary scheme is better than a Personal Pension is the fact that Pensions, though ruled by the European courts some years ago are a part of pay but we still discriminate in this country by allowing two people doing the same job two different rates of pay. A teacher who decides the TPS is not for him/her gets a package worth less than a teacher in the scheme there is no compensation be it pay or a contribution to ones own pension plans.

Here at least the employer is not discriminating, he is saying we have a set cost of employing you and you can join whatever scheme you like. If that happens to be the TPS so be it but we will not discriminate, we will however use a method known as salary sacrifice which enhances contributions to the full extent possible in law.

Is it not better to work for an employer who does not discriminate or one that does?

In Firmonkeys case in my sums I've worked out it will cost her from her nett pay £104.22p per month to join the TPS and have a reduced salary of £28,777. from her actual salary today of £31,116 The cost of joining it were she employed in a state school on £28,777 would be £91.69 So as long as she is getting £13 nett p/m more than the same job in the state shes on a winner.

The question she is asking though is which route would be best for her, to take the salary sacrifice and go with the TPS or go the personal pension / stakeholder route. with or without salary sacrifice.

No one to date has told he what either will cost let alone attempted a comparison and she has already seen at least 1 IFA who was of no use at all merely saying the choice is hers to make. She is admittedly in the dark as far as pension provision never having looked into it at all. So what I'm doing (Snooker permitting) is virtually the same as if I were still an IFA today and putting the options to her in writing, and explaining each in plain English comparing one route costing her £104.22 with another costing £104.22.

I'll not make a recommendation of course I'm just going to give her all the info and tools she needs to make her own. So far it's five pages and a spreadsheet with a couple of pages to go. I've not missed any snooker, been playing it once and gone fishing fo a day too, the washing up is a mile high though and it'll take me a day at least to catch up with all the other chores I've skipped.