The schemes to pay more into your pension are called flexibilities, and the only one available to Final Salary is Additional Pension. You can also purchase Additional Pension in the Career Average arrangement. It is possible to be in both arrangements, both the Final Salary and the Career Average scheme, and it is important to note there is a £7000 cap on your further contributions to your pension.
What is Additional Pension?
Members of the Teachers’ Pension Scheme are permitted to make additional contributions and buy extra pension. You can purchase this Additional Pension of £250, and there’s a couple of ways to do this. First, you can pay a single lump sum. Alternatively, you request deductions from your salary. The maximum period for payment in instalments is 20 years and must be before your Normal Pension Age.
Things to consider
Paying by instalments in multiples of £250 comes with some things to consider. First, if you start part-time work, you will continue to pay the same contribution. Second, you will need to expect that your contributions can change, as there is an annual revaluation of the Scheme.
By buying this Additional Pension, you will also be paying additional peace of mind for your family should something tragic befall you. If you elected to purchase Additional Pension and opted for this to be for you and your partner, 50% of the amount you have elected to buy will be paid as a pension to them.
Additional Pension is calculated based on your age, gender, Normal Pension Age, and the amount of Additional Pension you purchase. Therefore, the calculated benefits of this flexibility are challenging. You may want to speak to an independent financial advisor to consider the benefits of this Scheme in retirement.
The content in this article was correct on 23rd May 2021. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pensions for teachers and non-teachers. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.