Protecting the family: maximising benefits

When we view the teacher’s pension in the round, the benefits far outstrip our retirement. We pay an amount each month for the sake of a far-off future, and it is difficult to appreciate this too much. However, considering the payable grant should we pass away in service and the potential pension benefits available to a partner or dependents, the benefits seem more relevant.

There are ways of maximising these benefits within your pension. While there are limits on the additional payments you can make, you can add to your pension fund and increase its potential value to you and your family.

Here we explore the flexibilities in your pension. Flexibilities are the different options available to you to pay more into your pension.

Additional Pension

Available to both those in the Final Salary and Career Average arrangement, additional pension is a set amount you can choose to buy each year.

Faster Accrual

Faster Accrual is available if you are in the Career Average arrangement. The standard accrual is at 1/ 57^th of pensionable earnings. You can choose to purchase 1/55^th, 1/50^th or 1/45^th.

Buy-Out

Buy-Out is available to those in the Average arrangement. Your NPA maybe 66, 67, or 68. You may wish to retire at 65. You can choose to buy out the 1 – 3 years of your pension, so you can receive your teacher’s pension when you retire at 65 without fear of reductions in your benefits payments.

Summary

All these flexibilities are subject to a maximum amount you can pay extra into your pension. There may be a time limit for taking up one of these options, and you may need to make a long-term commitment. Consequently, before committing, you may wish to speak to an independent financial advisor. Remember, the Teachers’ Pension Scheme cannot offer advice on your personal circumstances, so you need to ask someone independent to talk you through the consequences on your finances.

The content in this article was correct on 29^th November 2021. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on your teachers’ pension scheme, as well as financial matters in general. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.