So, you have completed your PGCE or training programme and won your first job starting in September. You have achieved so much and come far, and it is time to reap the benefits. While life as an NQT is still about learning your role, you will now be paid for your commitment.
You may be certain of your salary and how this will grow with experience and promotion, but you may not realise that this is not the only benefit you enjoy. Here we explore the benefits of the teachers’ pension.
What is the teacher’s pension?
Your teachers’ pension is a generous scheme that helps you save for retirement. You, your employer, and the government contribute to a fund of money that helps you in the future when you no longer work. You and your employer contribute to your pension each time you are paid. The government assists in this by taking your pension contribution before tax is taken from your salary, meaning you do not pay tax on these contributions that you can access when you retire.
A pension is a long-term contract that is not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age).
Is it a benefit?
When we hear that we must contribute money to something, we wonder if it is a benefit at all. Yet, your pension genuinely is an extension of your salary and something that makes teaching a desirable profession.
First, you are guaranteed a pension through the Teachers’ Pension Scheme.
Second, you pay in, and so does your employer, who is topping up your salary with this extra money for your future.
Thirdly, it is a Defined Benefit Scheme, which means it is registered with the HM Revenue and Customs, so it is a pension calculated by your service rather than investments. This means there is no chance that the money will be lost before retirement.
Next is peace of mind; as you know, there will be a source of income when you retire, and you can take some as a tax-free lump sum.
Finally, the longer your service, the greater your value in your average career arrangement.
The content in this article was correct on June 30th 2022. 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.