What do I do

Horizon18 · 6 November 2018 at 2:46PM

I was going to post this on a hobby forum that i'm on but realised that this place would probably offer much better advice!

I'm 25 years old and I recently quit employment and started a limited company. I was with the teachers pension scheme for 18 months with my previous employer.

I plan on having some sort of pension/investment fund going forward and don't know whether to carry on paying in to my teachers pension or find something different.

As i was employed for less than 2 years, I could take repayment of my pension contributions during the 18 months I was employed, which would be £1300ish minus tax, and the £3k that my employer contributed would go back to them.

I don't have a great understanding of how pensions work but I gather that if I leave the money in the scheme, I can't get it until I reach retirement age.
So I don't know whether to keep the £4300 in the teachers pension, transfer it to a different scheme, or take the £1300 minus tax as a lump sum to invest in my business or pay into a different investment scheme.

What would you do? Thanks for any advice!

xylophone · 6 November 2018 at 3:19PM

and don't know whether to carry on paying in to my teachers pension

You cannot continue to contribute to TPS if you have left your teaching job?

You do not qualify for a deferred pension with less than two years in the scheme?

You could transfer out into a personal pension and then have your limited company make pension contributions on your behalf?

https://www.pensionbee.com/pensions-explained/pension-contributions/contributing-to-your-pension-from-your-limited-company?ast=Rqt6l4

dunstonh · 6 November 2018 at 3:23PM

As i was employed for less than 2 years, I could take repayment of my pension contributions during the 18 months I was employed, which would be £1300ish minus tax, and the £3k that my employer contributed would go back to them.

That method is the worst option. Keeping in the scheme, if allowed, or moving it to another pension is nearly always the financially better option. I have seen cases where the transfer value has been 10x higher than the contribution return value.

kidmugsy · 6 November 2018 at 3:48PM

xylophone wrote: »

You could transfer out into a personal pension and then have your limited company make pension contributions on your behalf?

And then if his company flourished he could transfer his pension into, say, an SSAS and use it to help fund the company.

Horizon18 · 6 November 2018 at 5:16PM

xylophone wrote: »

You cannot continue to contribute to TPS if you have left your teaching job?

You do not qualify for a deferred pension with less than two years in the scheme?

You could transfer out into a personal pension and then have your limited company make pension contributions on your behalf?

Interesting link! Thank you.

I believe I can use the teachers pension scheme with my limited company, as we are education focussed. I have not checked for certain yet.

Because I was in the TPS for less than 2 years, I can take my contributions out as a bulk sum (subject to tax).

kidmugsy wrote: »

And then if his company flourished he could transfer his pension into, say, an SSAS and use it to help fund the company.

Not heard of an SSAS before but i'll read up on it. Thanks.

OldBeanz · 6 November 2018 at 10:12PM

Do not lose the £3k employer contributions.
If you can stay in the TPS then do that.
If not open a SIPP or PP and transfer the funds.

wanman · 7 November 2018 at 10:15AM

Some of the options discussed above are not available to you according to the FAQs on the web site

https://www.teacherspensions.co.uk/members/faqs/taking-a-break/leaving-or-taking-a-break-from-the-scheme.aspx

"The minimum qualifying period for benefits from the Teachers’ Pension Scheme is 2 years service if you were in pensionable employment on or after 6 April 1988."

"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."

Horizon18 · 8 November 2018 at 6:24PM

wanman wrote: »

Some of the options discussed above are not available to you according to the FAQs on the web site

"The minimum qualifying period for benefits from the Teachers’ Pension Scheme is 2 years service if you were in pensionable employment on or after 6 April 1988."

"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."

I'm not sure what either of those statements actually mean.. :embarasse

I thought "benefits" in terms of the Teachers Pension referred to other benefits on top of the bog standard pension.

I now know the difference between a DBS and a DCS but not sure how that restricts me in terms of transferring to an SSAS as mentioned above.

xylophone · 8 November 2018 at 6:34PM

"The minimum qualifying period for benefits from the Teachers’ Pension Scheme is 2 years service if you were in pensionable employment on or after 6 April 1988."

You need to have been a member of the scheme for at least two years before you qualify for a deferred pension (if you leave), or a sick pension or spouse/ dependant pension etc.

"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."

If you have qualified for benefits from the scheme then you cannot transfer out to a DC scheme, only a DB Scheme.

kidmugsy · 8 November 2018 at 9:43PM

It looks to me that you have no choice but to take the refund of contributions.

xylophone · 8 November 2018 at 10:25PM

It looks to me that you have no choice but to take the refund of contributions.

As he has not yet qualified for benefits in the scheme, (less than two years in it) I think he should check whether he can transfer to a personal pension rather than just take a refund.

What do I do

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