Have you considered adding more money to your pension? The Teachers’ Pension Schemes offers Pension Flexibilities that allow you to increase your benefits.
Why would you increase your contributions?
Increasing your work-based Teachers’ pension scheme contributions is the safest way to boost your income in retirement. Putting your money into a private pension with a higher risk investment strategy is risky, especially close to retirement. However, making the most of your pension contributions to your Teachers’ Pension Scheme will bring an immediate boost to your retirement income. It will also increase the tax relief you gain from making this additional payment.
What are the maximum amounts I can pay in?
You can either purchase Additional Pension with the final salary and the Career Average arrangement or through faster accrual or through the buy-out of actuarial reduction (both only available in the Career Average arrangement). The amount you can add to your pension is set at a fixed amount, and this rises each year to keep in line with the Pension Increases.
In 2020-2021 the Pension Increase is 1.7%. Therefore, the maximum amounts have increased by this percentage. Consequently, you can improve your contributions by the following amounts:
Career average arrangement: £7100
Final salary arrangement: £6900
At a time, such as this, when economic uncertainty is rife, using the safe port of your work-based pension seems the viable option. However, you should approach an independent financial advisor who will be able to give you the fuller picture of how to make the most of your money for the future.
The content in this article was correct on 16th October 2020. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on your Teachers’ Pension Scheme. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.