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  • FIRST POST
    • foofi22
    • By foofi22 15th Oct 19, 10:30 AM
    • 2,040Posts
    • 1,330Thanks
    foofi22
    Teacher pension scheme options
    • #1
    • 15th Oct 19, 10:30 AM
    Teacher pension scheme options 15th Oct 19 at 10:30 AM
    Hi


    My wife (standard rate tax payer) is a member of (and currently pays into) the teacher pension scheme (TPS)

    She'd like to contribute extra towards retirement (to hopefully enable an earlier retirement) but is unsure what option is "best"

    The options within TPS are far as we know are:
    - additional pension.
    - faster accrual
    - reduce NPA to 65

    Or outside of the TPS:
    - contribute to a S&S LISA
    - contribute to a personal pension

    I generally understand the differences between LISA and personal pension options. Although I don't particularly know which of these two is better in our case. I like that LISA is tax free but contributions stop at 50 and has a slightly higher access age.

    We have no idea about the TPS options, which is the crux of this post.

    We know the TPS scheme is a "good deal " but are any of the three options a good deal?

    As an example, the online calculator for additional pension says that it would cost 1449 a year for 20 years to get 2000 extra pension which to me at least doesn't seem overly generous.

    Is one TPS option better than the others? For example is it "better" to (a) pay to reduce NPA to 65 or (b) buy faster accrual and retire at 65 but take the actuarial reduction?

    I realise this might be a bit open ended but just looking for some general guidance and thought on what other people might be doing

    Thanks
Page 3
    • GAry
    • By GAry 26th Oct 19, 7:39 AM
    • 24 Posts
    • 4 Thanks
    GAry
    Hi,
    I don't think this is right. If you are taking early retirement i.e. before NRA then you have to take both schemes together, but if you are retiring at NRA you can defer the second.

    I believe your are right! I have checked the Northern Ireland scheme, just to be sure it is the same in this part of the UK and it seems to concur - see link.
    The letter received does appear to be wrong and we will now take this up with the education authority.

    https://www.education-ni.gov.uk/publications/factsheet-4-retirement

    Thanks, this forum has proved very useful; moreso than the pension administrators.

    I'll update after they respond.
    • GAry
    • By GAry 17th Nov 19, 6:59 PM
    • 24 Posts
    • 4 Thanks
    GAry
    Actuarial reduction
    Ref the last post-

    Yesterday we received a reply from the Department of Education (NI). The original letter we were sent seems to be valid after all.

    My wife falls into the category of 'transition member' = within 13.5 years of NRA60 on 1 April 2012.

    So - this means that if she takes the NRA60 scheme at age 60, that she is 'forced' to take the CARE scheme at the same time, but the CARE (NRA67) scheme will be actuarially reduced by 31% (= 7 years).

    Interestingly, when I do a quick assessment (no indexing for increases/inflation etc) of what impact this has, it is not too bad in real terms. It takes 21+ years until the income totals break-even i.e. she needs to be aged 81-82 before the extra income from the CARE NRA67 scheme matches the income from drawing 7 years early. Even then, the numbers are quite small as there is not much in the CARE scheme.

    Hope this is useful for all those considering what their options are.
    • cobson
    • By cobson 18th Nov 19, 7:52 AM
    • 56 Posts
    • 57 Thanks
    cobson
    Unless there are restrictions specifically in place for NI then I wouldn't draw a line under this just yet.

    The doc linked to below is from the TPS themselves. Its contents throws doubt on what the DoE are telling you:

    https://www.teacherspensions.co.uk/-/media/documents/member/factsheets/miscellaneous/understanding-scheme-changes/understanding-which-member-type-you-are-factsheet.ashx

    Firstly, if you wife was within 13.5 years of her NRA at April 2012 (and more than 10 years) then she would be a Tapered member, not a Transition member. The latter are those who were more than 13.5 years from NRA.

    Secondly, whichever type of member she is it clearly states that both types can choose whether they want to take their career average benefits early with actuarial reduction or defer them to the career average scheme's NRA.

    It might be worthwhile for your wife to contact the TPS and her union for their views ?
    Last edited by cobson; 18-11-2019 at 7:56 AM.
    • GAry
    • By GAry 18th Nov 19, 8:23 AM
    • 24 Posts
    • 4 Thanks
    GAry
    I was not too convinced either and was considering looking into it in more detail, including contacting the union.
    However, when I did the break-even analysis and found that it took 21+ years until the benefits would be realised by 'deferring' the CARE portion until NRA67, then it seemed like taking it early, even with the actuarially reduced benefits, was perhaps the best option.
    In fact, some of the analysis shows that if it is deferred until the couple of years before NRA67, then it is necessary to live until age 99, before the breakeven point is reached.

    We don't need to make quick decisions, so can still review the options for a few years yet.

    Thanks for your help.
    • frugal90
    • By frugal90 18th Nov 19, 8:39 AM
    • 279 Posts
    • 207 Thanks
    frugal90
    Ref the last post-

    Yesterday we received a reply from the Department of Education (NI). The original letter we were sent seems to be valid after all.

    My wife falls into the category of 'transition member' = within 13.5 years of NRA60 on 1 April 2012.

    So - this means that if she takes the NRA60 scheme at age 60, that she is 'forced' to take the CARE scheme at the same time, but the CARE (NRA67) scheme will be actuarially reduced by 31% (= 7 years).

    Interestingly, when I do a quick assessment (no indexing for increases/inflation etc) of what impact this has, it is not too bad in real terms. It takes 21+ years until the income totals break-even i.e. she needs to be aged 81-82 before the extra income from the CARE NRA67 scheme matches the income from drawing 7 years early. Even then, the numbers are quite small as there is not much in the CARE scheme.

    Hope this is useful for all those considering what their options are.
    Originally posted by GAry
    Think that the fire fighters judgement will be applied to the teachers pensions as well. Don't think they have the remedy yet? There is another thread somewhere about the fire fighters judgement somewhere?
    Early retired in summer 2018 and loving it
    • JoeCrystal
    • By JoeCrystal 18th Nov 19, 9:06 AM
    • 1,993 Posts
    • 1,415 Thanks
    JoeCrystal
    Think that the fire fighters judgement will be applied to the teachers pensions as well. Don't think they have the remedy yet? There is another thread somewhere about the fire fighters judgement somewhere?
    Originally posted by frugal90
    Well, the Government and the parties are a little busy at the moment. I reckon it will take a year or two before they decided to come up with a remedy.
    • GAry
    • By GAry 19th Nov 19, 1:12 PM
    • 24 Posts
    • 4 Thanks
    GAry
    We were not aware about the Firefighter ruling.

    This could very well have a positive impact on our situation and remove this problem completely.

    Thanks
    • GAry
    • By GAry 22nd Nov 19, 3:10 PM
    • 24 Posts
    • 4 Thanks
    GAry
    Taper Member
    Hi cobson,

    We have looked into what you have said and agree that the last letter received does indeed appear to be incorrect, when compared the the factsheets. My wife is a taper/partial protected member and not a transition member as stated by the Teachers Pension office.
    Another email has been sent, third time lucky......??
    I will post the reply.
    Thanks
    PS - the NI TPS factsheets do seem to disagree with the www.teacherpension website factsheet. I would be surprised if this is the case in reality. The Union will have to be queried/informed; maybe the rules are being interpreted or applied differently in different parts of the UK?
    • Fermion
    • By Fermion 22nd Nov 19, 4:38 PM
    • 114 Posts
    • 47 Thanks
    Fermion
    My wife went the AVC route with the TPS about 8 years ago, to be honest it's grown very, very little over the years, probably just kept pace with inflation, the choice of funds with Prudential is very limited.
    The only gain she has made is the fact that she is a high rate tax payer so gains the 40% relief.
    Originally posted by tony4147
    Similar situation with my wife. She paid significant contributions into the Prudential AVC for many years, but the performance was very poor. She decided to transfer all of her AVCs across into a SIPP (with HL) and has been very pleased with the results. A couple of the Global and Asian Equity Income funds have really grown significantly. She actually drew her Teachers pension 6 years ago (at 60) but did some part-time teaching for a couple of years all the time paying into the SIPP. She is now fully retired (and has now reached SPA) but she hasn't yet moved her SIPP into Drawdown. Probably do this next Autumn.
    • tigerspill
    • By tigerspill 25th Nov 19, 3:59 PM
    • 420 Posts
    • 223 Thanks
    tigerspill
    Hi cobson,

    We have looked into what you have said and agree that the last letter received does indeed appear to be incorrect, when compared the the factsheets. My wife is a taper/partial protected member and not a transition member as stated by the Teachers Pension office.
    Another email has been sent, third time lucky......??
    I will post the reply.
    Thanks
    PS - the NI TPS factsheets do seem to disagree with the www.teacherpension website factsheet. I would be surprised if this is the case in reality. The Union will have to be queried/informed; maybe the rules are being interpreted or applied differently in different parts of the UK?
    Originally posted by GAry
    My wife is also in the NITPS. Would have the email address you are using to contact them for questions.
    She is a Transition member and I believe that at 60, she can take the old FS NRA 60 pension and is NOT forced to take the NRA 67 CARE pension at that stage. If she takes it before 60, she IS forced to take the CARE NRA 67 pension as well - both actuarially reduced.

    Thats my understanding. She was at the UTU pension workshop on Thursday last week and has been offered a 1 hour one on one meeting to discuss her pension with a local (Belfast) IFA.
    • GAry
    • By GAry 25th Nov 19, 4:30 PM
    • 24 Posts
    • 4 Thanks
    GAry
    Transition Member NITPS
    Hi tigerspill

    See Factsheet 4 -
    https://www.education-ni.gov.uk/sites/default/files/publications/education/nitps-factsheet-4-retirement_0.pdf

    See specifically this statement: -
    "If you are a transition member and have service in the final salary and career average
    arrangements, you will have to take all your benefits (final salary and career average) at
    the same time and these will be actuarially reduced."

    My Wife has been classed incorrectly as a 'Transition' member and they tell her that she can't take them separately as you suggest. Our original plan was to take the NRA 60 at age 60 and then the CARE at a later date (before 67 it would be actuarially reduced).

    Contact email is: nitpsabsqueries@education-ni.gov.uk

    A Taper member should be able to take them separately, but we have not yet received confirmation back yet.

    If NITPS are correct (??), then it would appear that the NI scheme is different to the rest of the UK and Transition members don't have the same flexibility to take both schemes at different dates as per their UK colleagues.

    Please check with the UTU; it could be that the NITPS have got it wrong.

    Also, I suggest doing the breakeven maths for taking the CARE scheme early, we found that the breakeven point was surprising 'old' and are thus now likely to take it at least a few years before NRA67.
    • cobson
    • By cobson 25th Nov 19, 4:55 PM
    • 56 Posts
    • 57 Thanks
    cobson
    See specifically this statement: -
    "If you are a transition member and have service in the final salary and career average
    arrangements, you will have to take all your benefits (final salary and career average) at
    the same time and these will be actuarially reduced."
    Originally posted by GAry
    This paragraph is from the section in the factsheet that deals with early retirement, i.e. those who are 55 but have not yet reached NRA in their final salary scheme. In this case the member does have to take their benefits from both schemes.

    If your wife has reached NRA in her final salary scheme, then this section doesn't apply to her. The penultimate paragraph on page 3 applies instead, where it says that the member can choose what to do with the career average scheme. This is the case for both tapered and transition members.

    I wonder if someone at the DoE has read the above paragraph and incorrectly assumed that it applies to transition members in all circumstances, not understanding that it only applies to early retirement ? That would explain their original letter to you.
    • GAry
    • By GAry 25th Nov 19, 5:14 PM
    • 24 Posts
    • 4 Thanks
    GAry
    I wonder if someone at the DoE has read the above paragraph and incorrectly assumed that it applies to transition members in all circumstances, not understanding that it only applies to early retirement ? That would explain their original letter to you.
    I suspect you are right. Factsheet 4 could be misinterpreted easily and this particular paragraph taken out of context (as its under the early retirement section).

    We have queried this point a number of times and they have repeated it every time.

    However, they have also mis-classed my wife as a 'transition' member instead of a 'taper/partial protected' member, so this paragraph can't apply, so it will be interesting to see what they come back with this time.

    It looks like tigerspill is also now going to query the same point, with his wife being a 'transition' member.

    I am now looking for the the actual legislation, because it says this -

    "The following documents are for information purposes and if there is any differences between the legislation governing this scheme and the information contained within, the legislation will apply"

    when referring to the Factsheets etc.

    from here: https://www.education-ni.gov.uk/articles/overview-northern-ireland-teachers-pension-scheme-nitps
    • tigerspill
    • By tigerspill 25th Nov 19, 7:08 PM
    • 420 Posts
    • 223 Thanks
    tigerspill
    Hi tigerspill

    See Factsheet 4 -
    https://www.education-ni.gov.uk/sites/default/files/publications/education/nitps-factsheet-4-retirement_0.pdf

    See specifically this statement: -
    "If you are a transition member and have service in the final salary and career average
    arrangements, you will have to take all your benefits (final salary and career average) at
    the same time and these will be actuarially reduced."

    My Wife has been classed incorrectly as a 'Transition' member and they tell her that she can't take them separately as you suggest. Our original plan was to take the NRA 60 at age 60 and then the CARE at a later date (before 67 it would be actuarially reduced).

    Contact email is: nitpsabsqueries@education-ni.gov.uk

    A Taper member should be able to take them separately, but we have not yet received confirmation back yet.

    If NITPS are correct (??), then it would appear that the NI scheme is different to the rest of the UK and Transition members don't have the same flexibility to take both schemes at different dates as per their UK colleagues.

    Please check with the UTU; it could be that the NITPS have got it wrong.

    Also, I suggest doing the breakeven maths for taking the CARE scheme early, we found that the breakeven point was surprising 'old' and are thus now likely to take it at least a few years before NRA67.
    Originally posted by GAry
    I definitely read something different a couple of days ago from the TPSNI site (might have been in the FAQ - not sure). I will try to dig it out again.
    From memory it said that if you reach NRA of the FS scheme - you can take them independently.
    I will look tomorrow to see if I can find it.
    • GAry
    • By GAry 25th Nov 19, 7:22 PM
    • 24 Posts
    • 4 Thanks
    GAry
    I definitely read something different a couple of days ago from the TPSNI site (might have been in the FAQ - not sure). I will try to dig it out again.
    From memory it said that if you reach NRA of the FS scheme - you can take them independently.
    I will look tomorrow to see if I can find it.

    Try this (sent to NITPS in Londonderry in one of our earlier emails, but in the last letter received they insist it is not possible if a 'Transition' member)-

    NITPS FAQs - (https://www.education-ni.gov.uk/sites/default/files/publications/de/NI-Teachers-pension-scheme-2015-frequently-asked-questions.pdf)

    " Age Retirement!
    Where the member retires (is out-of-service) final salary benefits can be taken without career average benefits when a member reaches their NPA in their existing final salary arrangements. The member will be able to claim their benefits from final salary, without having to claim their benefits from the career average arrangements. "

    "If a member is out of service, and they have reached their NPA in their NPA 60 or NPA 65 scheme they can elect to take their benefits from the final salary arrangements only and can defer taking their benefits from the career average scheme."
    • tigerspill
    • By tigerspill 25th Nov 19, 7:25 PM
    • 420 Posts
    • 223 Thanks
    tigerspill
    UPDATE - just realised you posted this a few minutes ago. But I see nothing to indicate this is not she Transition members.

    From the FAQ for the NI TPS -

    A member is planning to take Actuarial Adjusted Benefits (AAB) / Actuarial Reduced Benefits (ARB) / Early Retirement – do they have to take all their benefits at the same time?
    If a member is applying for benefits before reaching their NPA in the final salary arrangements, they will have to take all their retirement benefits at the same time i.e. if a member has benefits in final salary (NPA 60 scheme) and career average arrangements (with an NPA of 67) and the member decides to retire at 58 this would result in the member taking their benefits from the final salary and career average arrangements at the same time.
    If a member is out of service, and they have reached their NPA in their NPA 60 or NPA 65 scheme they can elect to take their benefits from the final salary arrangements only and can defer taking their benefits from the career average scheme.
    However, please note: if a member takes their benefits early these will be actuarially reduced (approximately 5% per year before age 65 and 3% per year to their career average NPA – maximum period of 3 years). The actuarial reduction is because the member is claiming their benefits before their NPA.
    Last edited by tigerspill; 25-11-2019 at 7:28 PM.
    • GAry
    • By GAry 25th Nov 19, 7:42 PM
    • 24 Posts
    • 4 Thanks
    GAry
    Yes tigerspill.

    We sent this FAQ and the wording from Factsheet no 4 page 3 (as discussed above with cobson) to NITPS and they replied, by citing the early retirement paragraph from Factsheet page 4 -
    "If you are a transition member and have service in the final salary and career average
    arrangements, you will have to take all your benefits (final salary and career average) at
    the same time and these will be actuarially reduced."

    It is strongly suspected that they have misinterpreted this paragraph and applied it to all situations and not solely the early retirement use case.

    Instead of debating this anomaly with them (for the 4th time), we have highlighted that my wife is actually a Taper/Partially protected member and not a Transition member as they stated, so this paragraph does not apply in her case.

    It looks like you will need to open a similar discussion with them regarding Transition members and taking NRA60/65 and CARE schemes separately.

    Good luck.

    I will report back when we receive the next reply.
    • GAry
    • By GAry 25th Nov 19, 8:39 PM
    • 24 Posts
    • 4 Thanks
    GAry
    cobson and tigerspill -

    Here is the NITPS legislation -

    http://www.legislation.gov.uk/nisr/2014/310/pdfs/nisr_20140310_en.pdf

    UPDATED - Transition members -
    Schedule 3, Part 7, Chapter 2, para 29-
    "A transition member (P) who has not reached normal pension age under this scheme may
    apply under regulation 162 for payment of age retirement benefits in respect of P’s pensionable
    service under the existing scheme without applying for payment of P’s retirement benefits in
    respect of pensionable service under this scheme. "

    To me this suggests that Transition members can take both schemes separately.
    Last edited by GAry; 25-11-2019 at 8:49 PM. Reason: UPDATE
    • cobson
    • By cobson 25th Nov 19, 9:40 PM
    • 56 Posts
    • 57 Thanks
    cobson
    However, they have also mis-classed my wife as a 'transition' member instead of a 'taper/partial protected' member, so this paragraph can't apply, so it will be interesting to see what they come back with this time.
    Originally posted by GAry
    Confusingly, they sometimes use the term 'transition member' as a general term for any member who has both final salary and career average schemes, as well as the specific meaning of those who were more than 13.5 years from NRA at April 2012.
    Last edited by cobson; 25-11-2019 at 9:49 PM.
    • GAry
    • By GAry 25th Nov 19, 9:51 PM
    • 24 Posts
    • 4 Thanks
    GAry
    After reading the legislation, I believe that the key difference between a taper/ partially protected member and a transition member is the date of transition. This might explain why they may not be precise with their use of the terminology.

    However, it still seems that members with both schemes can elect to take them separately if the first NRA date has been reached.

    I have a feeling that there will be further debate needed with the DoE NITPS department
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