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  • FIRST POST
    • FIRSTTIMER
    • By FIRSTTIMER 6th Aug 18, 3:28 PM
    • 397Posts
    • 61Thanks
    FIRSTTIMER
    Anyone Good WIth Teacher Pension Scheme?
    • #1
    • 6th Aug 18, 3:28 PM
    Anyone Good WIth Teacher Pension Scheme? 6th Aug 18 at 3:28 PM
    Hi,


    I am currently looking to top up my pension regularly in order to facilitate an early retirement (57 or 60). Currently 35.
    I am a Higher Rate Tax Payer and I'm confused as to which is the best option that TPS provide?


    AVC?
    Faster Accrual?
    or the other one buying 250 chunks?
    I have already done the 3 year buyout.


    I was under the impression that paying into a S&S ISA and also a S&S LISA were the best option - but have been advised to look at paying more into my pension instead and just drip feed the S&S ISA for dire emergency cash and the S&S LISA just 50 a month I do at the minute.


    Advice please? Ultimately I want to retire with a pension that is paying its full pension standalone and the tax free cash coming from another vehicle (AVC/LISA/S&S ISA/FASTER ACCRUAL etc). The reason I am now thinking pension is the added benefits of 40% tax saving on top of better security? Again as a higher rate tax payer, I've avoided overpaying my mortgage as its only on a rate of 1-1.5%.


    All advice appreciated
    Thanks
Page 1
    • Dox
    • By Dox 6th Aug 18, 3:47 PM
    • 971 Posts
    • 759 Thanks
    Dox
    • #2
    • 6th Aug 18, 3:47 PM
    • #2
    • 6th Aug 18, 3:47 PM
    Might be a good idea to see an IFA and get some advice based on your overall situation?
    • FIRSTTIMER
    • By FIRSTTIMER 6th Aug 18, 3:51 PM
    • 397 Posts
    • 61 Thanks
    FIRSTTIMER
    • #3
    • 6th Aug 18, 3:51 PM
    • #3
    • 6th Aug 18, 3:51 PM
    Yeah - good point - looking not to pay the earth for one by just seeing what people on here think first or maybe have been experienced in....
    • kidmugsy
    • By kidmugsy 6th Aug 18, 8:26 PM
    • 11,709 Posts
    • 8,237 Thanks
    kidmugsy
    • #4
    • 6th Aug 18, 8:26 PM
    • #4
    • 6th Aug 18, 8:26 PM
    The reason I am now thinking pension is the added benefits of 40% tax saving on top of better security? Again as a higher rate tax payer, I've avoided overpaying my mortgage as its only on a rate of 1-1.5%.
    Originally posted by FIRSTTIMER
    In your shoes I'd be tempted by

    (i) Contributing to a pension to get 40% tax relief while that still exists. If you can do so by salary sacrifice, all the better.

    (ii) Not using an S&S ISA as an emergency fund. Use cash. It's possible to hold a handy sum in cash that earns more than the rate of CPI inflation.
    Free the dunston one next time too.
    • OldBeanz
    • By OldBeanz 6th Aug 18, 8:28 PM
    • 764 Posts
    • 590 Thanks
    OldBeanz
    • #5
    • 6th Aug 18, 8:28 PM
    • #5
    • 6th Aug 18, 8:28 PM
    If you can afford to pay all your money taxable in the HRT bracket into a pension then that must be your starting point.
    Looking at it for my son there did not appear to be much difference between the various options as they limited each one to presumably a similar cost/benefit. You also have to appraise whether you have a partner and if they are going to benefit. My son went for buying extra pension and will pay into an AVC or SIPP when these payments are complete. He is guaranteed to get that money at 68. Other benefits may drift with any further increase in pension age.
    • NorthernGeezer
    • By NorthernGeezer 6th Aug 18, 9:01 PM
    • 144 Posts
    • 20 Thanks
    NorthernGeezer
    • #6
    • 6th Aug 18, 9:01 PM
    • #6
    • 6th Aug 18, 9:01 PM
    Contributing to a pension to get 40% tax relief while that still exists. If you can do so by salary sacrifice, all the better.

    How does the 40% tax relief work?
    As a higher rate tax payer is it that you dont pay tax on your contribution then get the 20% added on your contribution by HMRC?
    • kidmugsy
    • By kidmugsy 6th Aug 18, 9:18 PM
    • 11,709 Posts
    • 8,237 Thanks
    kidmugsy
    • #7
    • 6th Aug 18, 9:18 PM
    • #7
    • 6th Aug 18, 9:18 PM
    How does the 40% tax relief work?
    Originally posted by NorthernGeezer
    If you use an independent personal pension of some sort - e.g. a SIPP - you contribute 80 and HMRC pays the provider 20 to add to your pot. Meantime you inform HMRC of your action - saying that you have made a gross contribution of 100 - and they repay to you a further 20, either in cash or by changing your tax code.

    With an AVC I'd guess that it would all be handled under PAYE. Perhaps our OP can tell us.
    Free the dunston one next time too.
    • xylophone
    • By xylophone 6th Aug 18, 10:43 PM
    • 26,799 Posts
    • 15,972 Thanks
    xylophone
    • #8
    • 6th Aug 18, 10:43 PM
    • #8
    • 6th Aug 18, 10:43 PM
    With an AVC I'd guess that it would all be handled under PAYE
    https://www.pru.co.uk/rz/teachers/

    AVCs are taken from your pay before tax, so the money you'd normally pay as income tax automatically goes into your AVC pot instead,
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