Thank you so much for this. I'm not actually a teacher, I work in the civil service, and there is no clear explanation like this of career average pension, which is what most of us will get. I was particularly struggling with understanding where on earth all the contributions go from my salary - this has finally cleared up my confusion!
This was very good. There is a complication now with the TPS because there is a court ruling that some members who were transferred from final salary in 2015 to career average, should be offered a remedy for that. Do you fancy trying to explain this?🙏🏼👍🏼
I've thought about teaching but I'm not qualified yet, in terms of paper. Although I have studied pedagogy in my spare time, when I feel able, but I don't always.
Thanks so much- very clear and helpful! I have one question- is there a minimum amount of service (time contributing) required in order to receive the teacher's pension benefits? If a teacher contributes for 5 years, then changes career, will they still receive the pension? If not, will the contributions be paid back? Thanks again!
Hi Rob, thanks for the comment. Yes agreed, probably should have included that in there. I did mention it in one of my NHS Pension videos, perhaps its worth address what it is and which pensions its affects.
Really useful video. Only thing I'm still confused about is the employer and employee contribution percentage (23% and 7.4% for example). What happens with that money? As you're using 1/57th of the salary to build up the pension value. So how do those other percentages actually form a part of this?
Hi there, Thanks for the kind words and excellent question. As this is a type of defined benefits scheme, any money that you and your employer contributes only helps pay for the current retirees from the scheme. So there really isn't any direct monetary benefit to you from the 23% & 7.4% being contributed to the scheme. But by being involved contributing to the scheme, you build up your own Pension Benefits and that is done by 1/57th per year. When it come to your turn to retire, the amount of Pension Benefits you have built up is what your retirement income will be from the scheme, and it will be funded by the employees and the employer contributing the scheme at that point in time. I hope this makes sense
The lump sum can be any amount you wish, but can only be up to 25%. Please note that any lump sum withdrawals you make, will have an impact on your Pension Benefits. For example, let's say your pension salary would be £20k without a lump sum at retirement. If you decided to take out 25% as a lump sum. Your pension salary will be reduced to £17k. But you will get £5k in tax free cash. Fyi, I made these numbers up,. Your Pension contact should be able to advise the actual impact would be.
in the TPS, it is possible to enhance the pension with a faster accrual rate, say 1/45th rather than 1/57th. Also, it is possible to buy extra benefit in £250 chunks. A question, if I am asked to pay, say £4,000 to buy £250pa better retirement penaion, then how much of my Annual Allowance, if anything is used up?
Both my wife are in receipt of a Teachers pension. We are both 82. My question is when one of us dies what percentage of the deceased's pension, if any , does the surviving spouse receive ?
Hi @anthonyboddy9673. Yes you and your wife should be entitled to a proportion of your Teacher Pensions if one of you passes away. . The amount of benefits the other half gets is dependent on a number of factors such as when you got married (were you still working as a Teacher or did you marry after you retired?), years of service and agreements made to your pension. You should be able to view your benefits for the spouse on this portal... www.teacherspensions.co.uk/members/member-login.aspx It is worth reading about the Goodwin Case which impacts the pensions given to surviving Male Spouses. This is a correction made, as Male Spouses where given less favourable pensions in the past due to discrimination against women's pensions. www.teacherspensions.co.uk/members/faqs/once-retired/family-benefits.aspx#:~:text=are%20Family%20benefits%3F-,Answer%3A,enhanced%20or%20total%20incapacity%20benefits.
I have a teacher’s pension. Should I too this up by buying additional pension from Teachers pension? Or by getting a LISA or private pension? Thank you! :)
I won't be able to advise exactly on what the best option is. My suggestion would be to ask yourself a few questions Why do you want to contribute more? If you want to retire slightly earlier then private pension and Lisa maybe ideal. How much do you want to contribute? LISA has a limited amount you can contribute Is your Pension actually sufficent for you to live on or do you need more/alot more? And look at all the pros and cons. Opening an investment isa could be another option for you, it also has great tax advantages but no limit on age. These are just a few things to ask yourself. There is no real wrong answer, but depending on what you want some avenues are better designed than others.
Can a teacher take their pension final salary scheme at 60 for the full amount and continue working full time and contributing to the career average scheme due at their state pension age of 67? Meaning they effectively have two incomes, pension from the final salary scheme at 60 and the same income from employment ?
I contacted the TP for a breakdown as they don't show the opening balance each year and how the 'boost' 1.6% and PI are added to the opening balance. They have said they can't show me this as it is in constant accrual. However, i am unsure if they have applied the revaluation correctly? Any advice welcome
No they do not. That responsibility is managed by the pension scheme themselves, they will take what they believe is the best course of action to ensure that there are sufficient funds to meet the pension obligations promised to members upon retirement
At 15mins 40 second you say how much your pension earnings would be "there and then"; do you mean subject to being allowed to draw at that time (over 55 years old minimum), or should we take it to be usual pensionable age? Should we assume if you paid nothing further into the pension (over and above minimum amount of time on a TPS pension), it would just increase by inflation?
Very useful thanks! I have a question concerning opting out the scheme and repayment of contributions. I’m eligible for a repayment of contributions: I worked 1 year as a qualified teacher and my annual gross salary was £27855. Do you know how much will be the amount of the repayment of contributions? Thanks a lot
Hi Amine, Thanks for your questions and apologies for the slight delay in my response. Can you confirm, when you say repayment - do you mean a refund? Thanks Kozan
Yes, you would be eligible for a refund. For more information please visit here: www.teacherspensions.co.uk/members/working-life/paying-in/payments-refunds.aspx If you have worked there for 12 months and your salary has been the same, you can expect approximately £2,061 (£27,855 x 7.4%) @@aminechambazi2519
@@FinancialMadness thanks, I already knew that 😅 My question was what amount I will be refunded? Is it the same amount I paid for 1 year (which means 7.6% of £27855)?
Thank you. How can I calculate what I would receive per month if I chose to retire at 55 please (ie 5 years early!) I started teaching in 1989 so have been in both schemes. Thank you.
You can look in to TPS Online and use the calculator. I started teaching 2016 and want to retire at 55 in 2047 and it's only £16k per year, £20k per year at 60 and 30k at 55. I'm on L7, so I feel this is a bit crap after 30 years teaching in a high stress job!
The State Pension would be paid to you separately from your Teacher Pension. This would be paid from the DWP (i.e. the Government), and the amount you get from the State, depends on the years of National Insurance Contributions. Currently the Maximum State Pension is £185.15 per week. Check out this Gov website to learn more :) www.gov.uk/new-state-pension/what-youll-get
Oh yeah..I get the same. So weird. Try the below link below, otherwise if you go on my channel, you can find a video on the McCloud Judgement. czcams.com/video/youYj6gYrm4/video.html
Thank you so much for this. I'm not actually a teacher, I work in the civil service, and there is no clear explanation like this of career average pension, which is what most of us will get. I was particularly struggling with understanding where on earth all the contributions go from my salary - this has finally cleared up my confusion!
Hi NB,
Aww thank you! I am glad you found this helpful! Thank you for this great comment :D
Amazing video! Explained thoroughly from the basics all the way to the details.
This is a very useful video and clear. Thank you.
Thank you! Now I know where my money is going every month.
You are welcome. I am glad you found the video helpful :)
This was very good. There is a complication now with the TPS because there is a court ruling that some members who were transferred from final salary in 2015 to career average, should be offered a remedy for that. Do you fancy trying to explain this?🙏🏼👍🏼
Really useful, especially with the tables of comparison. Thank you.
Thank you, I am glad you found it helpful :)
What if you opt in and out of your teacher pension. How is it calculated
Very useful. Thank you
Inflation 2% ...good one!
Hahaha yeah. This hasn't aged well
I've thought about teaching but I'm not qualified yet, in terms of paper. Although I have studied pedagogy in my spare time, when I feel able, but I don't always.
If it is something you are passionate about - you should definitely consider giving it a go
Very useful. Do you think HMRC can make wrong calculations while computing the final pension income? Some of friends had issues with their pensions.
Thanks so much- very clear and helpful! I have one question- is there a minimum amount of service (time contributing) required in order to receive the teacher's pension benefits? If a teacher contributes for 5 years, then changes career, will they still receive the pension? If not, will the contributions be paid back? Thanks again!
You have also omitted the 1.6% boost so the revaluation id PI as a % and 1.6%
Thanks for sharing. Is it worth mentioning the McCloud judgement, which will have a significant impact on teachers with final salary pension?
Hi Rob, thanks for the comment. Yes agreed, probably should have included that in there. I did mention it in one of my NHS Pension videos, perhaps its worth address what it is and which pensions its affects.
You should really have clarified this doesn't apply to Scotland.
Really useful video. Only thing I'm still confused about is the employer and employee contribution percentage (23% and 7.4% for example). What happens with that money? As you're using 1/57th of the salary to build up the pension value. So how do those other percentages actually form a part of this?
Hi there,
Thanks for the kind words and excellent question.
As this is a type of defined benefits scheme, any money that you and your employer contributes only helps pay for the current retirees from the scheme. So there really isn't any direct monetary benefit to you from the 23% & 7.4% being contributed to the scheme. But by being involved contributing to the scheme, you build up your own Pension Benefits and that is done by 1/57th per year.
When it come to your turn to retire, the amount of Pension Benefits you have built up is what your retirement income will be from the scheme, and it will be funded by the employees and the employer contributing the scheme at that point in time.
I hope this makes sense
@@FinancialMadness Thanks for this. I too had the same question and your answer is really well thought through. Using your calculator now.
Thanks James. I am glad you found it useful
I guess it makes a difference when getting the lump sum? If I understand correctly the lump sum is 25% of the 'pot'
The lump sum can be any amount you wish, but can only be up to 25%.
Please note that any lump sum withdrawals you make, will have an impact on your Pension Benefits.
For example, let's say your pension salary would be £20k without a lump sum at retirement.
If you decided to take out 25% as a lump sum. Your pension salary will be reduced to £17k. But you will get £5k in tax free cash.
Fyi, I made these numbers up,. Your Pension contact should be able to advise the actual impact would be.
in the TPS, it is possible to enhance the pension with a faster accrual rate, say 1/45th rather than 1/57th.
Also, it is possible to buy extra benefit in £250 chunks. A question, if I am asked to pay, say £4,000 to buy £250pa better retirement penaion, then how much of my Annual Allowance, if anything is used up?
if NPA is 68 can you retire at 50 and get annual pension from then on?
hello, you haven't included personal allowance for Income tax so it isn't calculated on the gross amount
Both my wife are in receipt of a Teachers pension. We are both 82. My question is when one of us dies what percentage of the deceased's pension, if any , does the surviving spouse receive ?
Hi @anthonyboddy9673. Yes you and your wife should be entitled to a proportion of your Teacher Pensions if one of you passes away. . The amount of benefits the other half gets is dependent on a number of factors such as when you got married (were you still working as a Teacher or did you marry after you retired?), years of service and agreements made to your pension. You should be able to view your benefits for the spouse on this portal... www.teacherspensions.co.uk/members/member-login.aspx
It is worth reading about the Goodwin Case which impacts the pensions given to surviving Male Spouses. This is a correction made, as Male Spouses where given less favourable pensions in the past due to discrimination against women's pensions.
www.teacherspensions.co.uk/members/faqs/once-retired/family-benefits.aspx#:~:text=are%20Family%20benefits%3F-,Answer%3A,enhanced%20or%20total%20incapacity%20benefits.
I have a teacher’s pension. Should I too this up by buying additional pension from Teachers pension? Or by getting a LISA or private pension?
Thank you! :)
I won't be able to advise exactly on what the best option is.
My suggestion would be to ask yourself a few questions
Why do you want to contribute more? If you want to retire slightly earlier then private pension and Lisa maybe ideal.
How much do you want to contribute? LISA has a limited amount you can contribute
Is your Pension actually sufficent for you to live on or do you need more/alot more?
And look at all the pros and cons. Opening an investment isa could be another option for you, it also has great tax advantages but no limit on age.
These are just a few things to ask yourself.
There is no real wrong answer, but depending on what you want some avenues are better designed than others.
Can a teacher take their pension final salary scheme at 60 for the full amount and continue working full time and contributing to the career average scheme due at their state pension age of 67? Meaning they effectively have two incomes, pension from the final salary scheme at 60 and the same income from employment ?
And would the career average still be penalised if the final salary was taken at 60, but the individual continues working.?
I contacted the TP for a breakdown as they don't show the opening balance each year and how the 'boost' 1.6% and PI are added to the opening balance. They have said they can't show me this as it is in constant accrual. However, i am unsure if they have applied the revaluation correctly? Any advice welcome
Do you know if teachers get to choose where their money goes in their pension (i.e. choosing which fund)? I've heard mixed answers on this in the UK.
No they do not. That responsibility is managed by the pension scheme themselves, they will take what they believe is the best course of action to ensure that there are sufficient funds to meet the pension obligations promised to members upon retirement
Does the amount paid in the guaranteed amount paid back? Or is there a risk to receive less than the amount contributed throughout the years?
At 15mins 40 second you say how much your pension earnings would be "there and then"; do you mean subject to being allowed to draw at that time (over 55 years old minimum), or should we take it to be usual pensionable age? Should we assume if you paid nothing further into the pension (over and above minimum amount of time on a TPS pension), it would just increase by inflation?
Very useful thanks!
I have a question concerning opting out the scheme and repayment of contributions.
I’m eligible for a repayment of contributions: I worked 1 year as a qualified teacher and my annual gross salary was £27855. Do you know how much will be the amount of the repayment of contributions?
Thanks a lot
Hi Amine,
Thanks for your questions and apologies for the slight delay in my response. Can you confirm, when you say repayment - do you mean a refund?
Thanks
Kozan
@@FinancialMadness hi Kozan.
Yes I mean a refund (I'm eligible to it)
Yes, you would be eligible for a refund. For more information please visit here: www.teacherspensions.co.uk/members/working-life/paying-in/payments-refunds.aspx
If you have worked there for 12 months and your salary has been the same, you can expect approximately £2,061 (£27,855 x 7.4%)
@@aminechambazi2519
@@FinancialMadness thanks, I already knew that 😅
My question was what amount I will be refunded? Is it the same amount I paid for 1 year (which means 7.6% of £27855)?
I believe. I answered that too :). Please check above
Thank you. How can I calculate what I would receive per month if I chose to retire at 55 please (ie 5 years early!) I started teaching in 1989 so have been in both schemes. Thank you.
You can look in to TPS Online and use the calculator. I started teaching 2016 and want to retire at 55 in 2047 and it's only £16k per year, £20k per year at 60 and 30k at 55. I'm on L7, so I feel this is a bit crap after 30 years teaching in a high stress job!
Is normal state pension of £150 added to this scheme?
The State Pension would be paid to you separately from your Teacher Pension. This would be paid from the DWP (i.e. the Government), and the amount you get from the State, depends on the years of National Insurance Contributions. Currently the Maximum State Pension is £185.15 per week.
Check out this Gov website to learn more :)
www.gov.uk/new-state-pension/what-youll-get
McCloud judgment?
I did make a follow up video on this topic. Check this video out :)
czcams.com/video/youyj6gyrm4/video.html
@@FinancialMadness Thanks but I get "This video isn't available any more"
Oh yeah..I get the same. So weird.
Try the below link below, otherwise if you go on my channel, you can find a video on the McCloud Judgement.
czcams.com/video/youYj6gYrm4/video.html
I have questions, where can I contact u
You can message me on Instagram @financialmadness or email at financialmadness1@gmail.com