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  • FIRST POST
    • FIRSTTIMER
    • By FIRSTTIMER 18th May 19, 3:51 PM
    • 541Posts
    • 106Thanks
    FIRSTTIMER
    Confused messages around Teachers Pension
    • #1
    • 18th May 19, 3:51 PM
    Confused messages around Teachers Pension 18th May 19 at 3:51 PM
    Salary 45k Age 35

    Normal Pension Payments (1/57) is 10.2%
    3 Year Buy Out to retire at 65 with Full Pension is 2.2%
    Faster Accrual (1/45) is 7.6%

    Altogether I am paying a lot into it before tax.
    My question is the faster accrual. It seems rather expensive (one advisor said yes it is, one said no keep it going) paying in so much for just 200 at age 65? The difference between 1/57 and 1/45 is only 200 on my current salary, yet it is costing me 7.6% per annum pre tax.

    Thoughts?
Page 1
    • hugheskevi
    • By hugheskevi 18th May 19, 4:27 PM
    • 2,258 Posts
    • 2,947 Thanks
    hugheskevi
    • #2
    • 18th May 19, 4:27 PM
    • #2
    • 18th May 19, 4:27 PM
    The faster accrual also benefits from the higher in-service revaluation rate of CPI+1.6%.

    If you were to leave at the end of the year, you would have paid 3,420 for 211 of CPI-indexed pension from age 65.

    If you stay in service until age 65 you will have paid 3,420 for 336 of pension (in today's price terms) of CPI-indexed pension from age 65.

    Purchasing 211 of Additional pension with dependents benefits payable from age 65 for a 35 year old would cost 1,815.

    Purchasing 336 of Additional pension with dependents benefits payable from age 65 for a 35 year old would cost 2,890.

    Main scheme pension is going to have better ancillary benefits than added pension, eg, ill-health benefits.

    Others will know more about the NHS pension scheme than me, but I think the Faster Accrual looks a bit expensive relative to Added Pension, especially if you do not remain in service for a long time.
    • FIRSTTIMER
    • By FIRSTTIMER 18th May 19, 4:30 PM
    • 541 Posts
    • 106 Thanks
    FIRSTTIMER
    • #3
    • 18th May 19, 4:30 PM
    • #3
    • 18th May 19, 4:30 PM
    Agreed - I may reverse the decision to have bought it.
    • LHW99
    • By LHW99 18th May 19, 4:41 PM
    • 1,961 Posts
    • 1,826 Thanks
    LHW99
    • #4
    • 18th May 19, 4:41 PM
    • #4
    • 18th May 19, 4:41 PM
    Presumably the additional amount is paid for life, so if you survive 20 years, 20 * 211 = 4220, 20 * 336 = 6720.
    Then there is the index linking, and the spouse / dependent's benefits? (not sure about those).
    • FIRSTTIMER
    • By FIRSTTIMER 18th May 19, 4:44 PM
    • 541 Posts
    • 106 Thanks
    FIRSTTIMER
    • #5
    • 18th May 19, 4:44 PM
    • #5
    • 18th May 19, 4:44 PM
    Good Point.
    I only have 3500 left of flexibilities to buy.
    It was either 20 years paying for 3500 in APB monthly. Or FA. Hmmm
    • zagubov
    • By zagubov 18th May 19, 11:19 PM
    • 16,164 Posts
    • 133,583 Thanks
    zagubov
    • #6
    • 18th May 19, 11:19 PM
    • #6
    • 18th May 19, 11:19 PM
    Hi. Which UK legal jurisdiction do you live in as there may be some subtle differences that could affect your choices.
    There is no honour to be had in not knowing a thing that can be known - Danny Baker
    • FIRSTTIMER
    • By FIRSTTIMER 19th May 19, 11:51 AM
    • 541 Posts
    • 106 Thanks
    FIRSTTIMER
    • #7
    • 19th May 19, 11:51 AM
    • #7
    • 19th May 19, 11:51 AM
    The way people have put it has been....both to be taken at age 65 currently.

    9.6% Cost = 1/57 = 790 banked yearly
    7.7% Cost = 1/45 extra banked yearly = 210 = Paying nearly 4 times as much.

    Therefore not worth it, which I now agree with.
    Last edited by FIRSTTIMER; 24-05-2019 at 8:20 AM.
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