When money is tight, and the present seems so complicated and uncertain, it feels impossible to contemplate paying into a pension. Not only is the Teacher Pensions’ Scheme a generous fund that offers lots of positive benefits, but you will also be surprised by how low the maximum State Pension is and how it won’t sustain anything but a basic lifestyle. The State Pension is only £175.20 per week, which is £9110.40 per year.
Why are we raising this as an issue?
There are millions of people failing to save for retirement. While they are living a relatively comfortable life now, these individuals without a pension plan are going to hit their 60s and experience a significant drop in their standard of living. You might not be able to retire at all and will find yourself working much later into your senior years if you fail to prepare your finances for retirment.
If you don’t want to invest in your pension or retire later, you have two other options:
- You can choose to save more each month
- You adjust your expectations about the life you will be able to afford in retirement.
Do teachers need to worry about this?
When you become a teacher in a state school, you will be automatically enrolled in the Teachers’ Pension Scheme. Other schools also choose to enrol into the scheme too for their pension provision. If you pay into this pension, it will come straight from your salary. What is good about this scheme is that the pension contribution is a) taken before taxation, and b) matched by your employer.
If this payment is automatically taken, you may wonder why we are exploring this issue. You do have the option to defer your membership and stop making contributions. Also, while your pension from teaching will support a much more comfortable lifestyle, you might still need to look to pay in more to the scheme if you can.
In short, even though teachers enjoy a generous pension scheme, there are still decisions to be made about your contributions. You can see projections of your expected income in retirement at My Pension Online.
The content in this article was correct on 14th November 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.