Teachers Pension Scheme VS Personal Pension

Main difference - in the teacher's scheme your employer also makes contributions. They will be worth more than you think they are and are basically free money. If you have a private pension this doesn't happen. So, why do you want to say 'no' to free money?

RaulSim wrote: »

I am part of the teachers pension scheme. I get paid just under £27,000 p/a and they currently deduct close to £250.

That doesn't quite sound correct. At 27K, the contribution rate is only 7.4% - https://www.teacherspensions.co.uk/employers/managing-members/contributions/calculating-contributions.aspx

In my opinion, this is too much of a large deduction considering I am only 23 and plan to work and contribute to some sort of pension until retirement.

It's 'high' because the TPS is a very generous scheme, although you will slightly negate that by not being in it for long - the 'revaluation' rate for active members is higher than the one for 'deferred' members, i.e. the longer you stay in, the more valuable previous years become.

My plan was to opt/transfer out of the teachers pension scheme and move to another one where I can lower my contributions to a more reasonable amount.

Opting out would be silly, as you wouldn't get the employer contribution in another form if so, however it would be necessary to transfer out (if you leave the scheme within two years, you will not earn a preserved benefit and so would have to either take a refund or transfer out).

I want to go for a similar scheme, meaning that my payout amount at retirement age is guaranteed and I don’t want to have to pick an investment.

Personal pensions (including stakeholders) aren't like that - they are intrinsically 'defined contribution'. A 'guaranteed' payout amount at retirement age and not having any investment decisions yourself are only possible in an occupational scheme, and moreover, only when the employer offers a defined benefit plan specifically, which for new joiners pretty much means the public sector only nowadays (there is the odd exception).

From research is seems a defined benefit pension or a stakeholder pension is the best.

Am I right in saying this?

No.

If no, what is the best scheme, and can anyone recommend a provider?

Stay in the TPS for as long as you are eligible. Naturally, this doesn't mean, stay a teacher for as long as possible - you may be happier in another occupation - but if so, for a pension anyway comparable, you will likely have to put in rather more than 7.4%, particularly as you get older.

For comparison - my employer offers a DC scheme with a 5% employer contribution, and I choose to put in 30%. Admittedly I am rather older than you, and also earn rather more - but I would imagine those two differences will reduce in step.

Or am I just better staying with the teachers pension scheme?

Yes.

The only advantage I see in staying in the scheme is some extra benefits you receive if you are a teacher for over two years

The 'extra benefits' are simply, a pension on scheme retirement age. Under two years, and you aren't eligible for a pension, even a tiny one.