Client Portal Independent financial planning advice for teachers

Teachers Logo
  • Home
  • Advice
  • About Us
  • Seminars
  • News
  • Downloads
  • Contact
Email
Home/News/Teachers Pension/Is a teachers’ pension good?
loading...

Is a teachers’ pension good?

27/05/2019 Racheal Smith

teachers' pension good

Some background details

If you start with the teachers’ pension scheme today, you will be joining a career average scheme.  Basically, this means you will receive a pension worked out as an average of your earnings during your membership in the scheme.  Every year you work you will receive a benefit that is equal to 1/57th of your annual pay.  This increases with inflation, using the September Consumer Prices Index plus 1.6%, which is added the following April.

Your contributions to this pension are proportional to your salary — the smaller your income, the lower the percentage of money taken for your pension.

It is likely that your Normal Pension Age when you will receive your teacher benefits without adjustment will be 66 years of age.

You have the choice to take the money as an income or choose to convert some of this benefit to a lump sum payment.

So, is a teachers’ pension good?

Let’s start with a significant positive.  The government funds the teachers’ pension scheme; it is not underwritten by an investment fund.  This means it is unfunded, and not susceptible to stock market fluctuations that could endanger your benefits.  The government is acting like a backstop, offering much more significant security on your investment.

The teachers’ pension is useful if you consider that there is a death-in-service benefit. This includes potential payment for dependents left behind after death.

However, there are ways that you could lose out of vital income if you make the wrong choices.  If you take your pension as a lump sum, you could be heavily penalised.  The lump sum is subject to a maximum 25% value of the pension.  The impact on your remaining pension fund is for every £12 of lump sum taken you trade in £1 of annual pension income.

Downsides?

Yet, the career average scheme offered to new teachers is nowhere near as generous as the final-salary scheme offered to older colleagues.  Some teachers are on a mix of final salary and career average – and like younger colleagues will receive reduced benefits than if the final salary scheme had continued.

The content in this article was correct on 19th May 2019. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on the Teachers’ Pension Scheme. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.

Share this article:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on WhatsApp (Opens in new window)
Posted under: Teachers Pension

Tagged in: Teachers Pension



Make an enquiry

Please complete and send the short contact form below and we will come back to you as soon as possible.

    First Name

    Telephone

    Email

    Enter code captcha

    Message
    ifa logo
    Apple App Store Google Play Store
    • Site Map
    • Cookies
    • Legal
    • Privacy
    • Careers
    • Facebook
    • Google
    • Twitter
    • LinkedIn

    Teachers Financial Planning Limited is an appointed representative of LJ Financial Planning Limited which is authorised and regulated by the Financial Conduct Authority. Financial Services Authority firm registration number 552276. Content on this website is provided for information purposes only and should not be considered advice. The information contained within this website is subject to the United Kingdom regulatory regime and is therefore primarily targeted to consumers in the United Kingdom. Registered in England & Wales 07612896. Registered Office: St James Business Centre, Wilderspool Causeway, Warrington, WA4 6PS. Calls to 08452 69 69 90 cost 5p [or 5p per minute] plus your phone company's access charge.

    © 2011-2020 Teachers Financial Planning Limited.
    Website designed and developed by Carpe Diem
    This website uses cookies to improve performance: Find out more.