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  • FIRST POST
    • bcfclee27
    • By bcfclee27 5th Mar 18, 8:02 PM
    • 184Posts
    • 46Thanks
    bcfclee27
    Any teachers on here - Pension Advice needed...
    • #1
    • 5th Mar 18, 8:02 PM
    Any teachers on here - Pension Advice needed... 5th Mar 18 at 8:02 PM
    So my wife is a teacher, she's 38 and been a teacher full time for about 10 years and been part time for another 3.

    Not sure if I will ever persuade her to go back full time....

    I think the teachers pension is a good one however I think she has to work til like 68 to get the full benefit ?
    I plan on retiring from the police at 55 and I'm sure she will want to retire at the same age.

    I think she can retire and draw her pension at 55 but takes a big hit something like 25% for coming out early ?

    To supplement this I'm thinking of investing into a Lifetime ISA for her to supplement this and give her a lump sum at 60.

    Can anyone clarify on the above, will she get a reasonable pension at 55 or will part time and early retirement really effect it.
    Is a LISA the right way forward ?

    Many thanks
Page 1
    • Alistair31
    • By Alistair31 5th Mar 18, 8:06 PM
    • 34 Posts
    • 22 Thanks
    Alistair31
    • #2
    • 5th Mar 18, 8:06 PM
    • #2
    • 5th Mar 18, 8:06 PM
    A LiSA would be a good choice.
    • Dazed and confused
    • By Dazed and confused 5th Mar 18, 8:52 PM
    • 2,569 Posts
    • 1,236 Thanks
    Dazed and confused
    • #3
    • 5th Mar 18, 8:52 PM
    • #3
    • 5th Mar 18, 8:52 PM
    will she get a reasonable pension at 55

    That is very subjective and as you have given us no clue to her current salary or which of the NHS pension schemes she is in it isn't really possible to give a personal opinion.

    Although my initial thought is yes, it will be reasonable.

    Whether reasonable is enough is another matter entirely.

    And 25% reduction for taking it 13 years early is probably very optimistic thinking
    • atush
    • By atush 5th Mar 18, 9:21 PM
    • 16,709 Posts
    • 10,412 Thanks
    atush
    • #4
    • 5th Mar 18, 9:21 PM
    • #4
    • 5th Mar 18, 9:21 PM
    There is a pension forum. Go there and ask this question. There are other teachers and govt employees who know all the details.
    • bcfclee27
    • By bcfclee27 5th Mar 18, 9:49 PM
    • 184 Posts
    • 46 Thanks
    bcfclee27
    • #5
    • 5th Mar 18, 9:49 PM
    • #5
    • 5th Mar 18, 9:49 PM
    There is a pension forum. Go there and ask this question. There are other teachers and govt employees who know all the details.
    Originally posted by atush
    Didn't know this - thanks will do.
    • PeacefulWaters
    • By PeacefulWaters 5th Mar 18, 9:51 PM
    • 8,320 Posts
    • 10,638 Thanks
    PeacefulWaters
    • #6
    • 5th Mar 18, 9:51 PM
    • #6
    • 5th Mar 18, 9:51 PM
    A LiSA would be a good choice.
    Originally posted by Alistair31
    For retiring at 55???
    • mjfp509
    • By mjfp509 6th Mar 18, 8:53 AM
    • 152 Posts
    • 49 Thanks
    mjfp509
    • #7
    • 6th Mar 18, 8:53 AM
    • #7
    • 6th Mar 18, 8:53 AM
    If she has been teaching 10 years, she will have about 7 years in final salary scheme and about 3 years in career average (it changed to this in April 2015 and isn't as good).

    She will be able to take her pension at 55, but will be hit with reductions, particularly the career average part. The final salary part is about 4-5% per year drawn early; more for career average. Google "early retirement actuarial reduction teachers" and look at the pdf file, about the first / second link down on the search. It's a bit cumbersome, but you can work out the reductions she will have to make from the final salary part and career average.

    It may be better for you to open a SIPP instead of taking a hit on drawing the teacher's pension early.

    You also get tax relief added, so you put 100 into a SIPP, it gets made up to 125. That is a better return than a lisa.

    You could also buy additional pension or faster accrual, etc. from teacher's pensions, so her teacher's pension improves. This may be another option to explore.
    Last edited by mjfp509; 06-03-2018 at 9:09 AM.
    • Lungboy
    • By Lungboy 6th Mar 18, 9:01 AM
    • 1,376 Posts
    • 1,319 Thanks
    Lungboy
    • #8
    • 6th Mar 18, 9:01 AM
    • #8
    • 6th Mar 18, 9:01 AM
    You also get tax relief added, so you put 100 into a SIPP, it gets made up to 125. That is a better return than a lisa.
    Originally posted by mjfp509
    You get the same in a LISA on up to 4k of contributions per year.
    • ValiantSon
    • By ValiantSon 6th Mar 18, 10:29 AM
    • 1,889 Posts
    • 1,750 Thanks
    ValiantSon
    • #9
    • 6th Mar 18, 10:29 AM
    • #9
    • 6th Mar 18, 10:29 AM
    The actuarial reduction isn't 25%. This figure gets quoted a lot, but is nonsense. The reduction depends on when you take the pension and which schemes you are drawing on. You need to get the GAD document with the formulae for doing the calculations.

    To complicate things a little, there are two final salary schemes. Given her years of service she may well have been a member of the newer version, so you need to check that.

    Working part time means that she won't be accruing a full year each year, but instead a proportion. For example, if she works 0.5 then she will earn 1/57th every two years rather than every one, so this can have a significant impact on her pension. If I were her, I would return to full time work.

    She probably won't be able to retire at 55 because the stated intention is to raise the retirement age to 57.

    Buying additional pension is one option, or faster accrual, which will reduce the accrual denominator from 57ths to 55ths, 50ths, or 45ths depending on her choice. The smaller the denominator the bigger the pension, but also the greater the cost. Each year of faster accrual is more expensive than the previous one.

    Using either of those flexibilities can help to off-set the impact of actuarial reduction.
    • cloud_dog
    • By cloud_dog 6th Mar 18, 12:18 PM
    • 3,698 Posts
    • 2,192 Thanks
    cloud_dog
    So my wife is a teacher, she's 38 and been a teacher full time for about 10 years and been part time for another 3.

    Not sure if I will ever persuade her to go back full time....

    I think the teachers pension is a good one however I think she has to work til like 68 to get the full benefit ?
    I plan on retiring from the police at 55 and I'm sure she will want to retire at the same age.

    I think she can retire and draw her pension at 55 but takes a big hit something like 25% for coming out early ?

    To supplement this I'm thinking of investing into a Lifetime ISA for her to supplement this and give her a lump sum at 60.

    Can anyone clarify on the above, will she get a reasonable pension at 55 or will part time and early retirement really effect it.
    Is a LISA the right way forward ?

    Many thanks
    Originally posted by bcfclee27
    I cannot really offer any insight regarding the teacher pension aspect but, regarding LISA or pension (personal pension or SIPP), I think I would go down the pension route.

    Whilst the early retirement age (currently 55) is likely to increase (mooted in papers to likely to be kept in step with SPA minus 10 years), it is still earlier than the LISA commencement age of 60 (currently).

    Unsure if you want/need to go down the SIPP route or not. A lot of people on these boards like the Aviva personal pension taken out via Cavendish. This entails a start up fee, I think 30, but you then benefit from lower charges on the pension.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • PeacefulWaters
    • By PeacefulWaters 6th Mar 18, 2:44 PM
    • 8,320 Posts
    • 10,638 Thanks
    PeacefulWaters
    You get the same in a LISA on up to 4k of contributions per year.
    Originally posted by Lungboy
    But pointless in the context of retiring at 55.
    • ValiantSon
    • By ValiantSon 6th Mar 18, 9:38 PM
    • 1,889 Posts
    • 1,750 Thanks
    ValiantSon
    You get the same in a LISA on up to 4k of contributions per year.
    Originally posted by Lungboy
    No you don't. LISA contributions are made after tax. Pension contributions receive tax relief, but LISA contributions don't. Money in LISAs is exempt from income tax (and, if S&S, capital gains and dividend tax). These are not the same as tax relief.
    • Lungboy
    • By Lungboy 6th Mar 18, 9:49 PM
    • 1,376 Posts
    • 1,319 Thanks
    Lungboy
    No you don't. LISA contributions are made after tax. Pension contributions receive tax relief, but LISA contributions don't. Money in LISAs is exempt from income tax (and, if S&S, capital gains and dividend tax). These are not the same as tax relief.
    Originally posted by ValiantSon
    Fair point although I was referring to the figures rather than the tax relief status specifically. I wasn't very clear.
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