Times are challenging and it may be that you need to boost your salary. It might be that a partner or other member of the household has lost their income and you are now stretching what you earn to cover more. One option you could consider is opting out of the pension scheme. You may have noticed that a large amount of your deductions each month goes to your pension. Right now, your needs are more urgent than any thoughts of a liveable income when you retire.
It is easy to opt-out of the scheme, you merely need to complete a form on the Teachers’ Pension Scheme website. The form will need to be completed by yourself and your employer. If you have worked for less than two years as a teacher, you may be able to seek a refund for contributions already made.
There are some important details to consider before you opt-out.
- Your employer also contributes money to your pension.
- Your contribution to your pension is not subject to taxation.
- You will lose access to ill health cover, death benefits and a pension for your partner and children should you die.
- Your pension will provide a guaranteed income when you retire, and retirement poverty is a real concern.
- You could lose the flexibility that will allow you to retire at 55.
Although the short-term gain of a highly monthly salary could be necessary, you also need to think long-term. The consequences may be significant to your quality of life when you retire. Speak to an independent financial advisor to understand the consequences for you.
The content in this article was correct on 15th May 2020. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on the different types of retirement available with 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.