Teaching pensions: advice please

[Americansmoothie]

My DP (63) and me (64) have been together for 19 years and jointly (50:50) own our own home outright. DP was a teacher for 21 years from 1982 to 2003. He left teaching in 2003 and started his own business, which unfortunately went bust after the 2008 crash.

We've been talking about retirement for the last five years. I have, in the last 20 years, worked really hard to ensure I have a decent pension on top of the full State pension. I've always been clear that I want the first ten years of our retirement, while we're still fit and active, to involve a lot of travel and some adventures. For various reasons I missed out on the travelling opportunities that lots of my contemporaries enjoyed and I want to catch up. My partner's teaching pension has always been factored into our calculations. He's used online calculators that indicate that his pension should be in the region of £12+k pa, with a £35+k lump sum. Combined with the pension he's accrued since 2009, and his savings, it was looking as if we should be able to retire and splash out next year.

BUT... before Christmas he contacted the teachers pension scheme for precise details — and they reminded him that he'd apparently taken his entire pension fund when he left teaching in 2003. He now says that he thought he'd taken some of it to start the business that went bust in 2008, but not everything. Were you, 20 years ago, able to take everything from a teaching pension fund and walk away with it?

I think if they said he did then he must have done. I’ve always found them really helpful and transparent.

If it was a Defined Benefit scheme (I assume so) then normally you get an annual pension statement even when the scheme is deferred so I'm not sure how he could've not known? Until relatively recently it was fairly easy to transfer out of a DB scheme so 20 years ago it probably was more common.

I thought the earliest you could cash in a pension was 55 years old. Which he obviously wasn't in 2003

Which online calculators did he use? Didn’t he do it on the teachers’ pensions website?

I thought the earliest you could cash in a pension was 55 years old. Which he obviously wasn't in 2003

Yes, I know. I was wondering whether the teachers' scheme was different. I didn't think you could just withdraw all your money from a pension fund and take it as cash — but obviously a lot's changed in the last 20 years.

I don't know what to think. Obviously it not only buggers up immediate plans to retire (his lump sum and pension were part of the calculations when we were planning things like buying a camper van and spending as long as possible in Europe next year). I'm going to have to start digging. Bit nervous about what I'm going to find.

Longer term, if he has no pension from that period of his life then the travel and adventures are going to have to come out of my funds. Not sure how I feel about that. I lost my pension in the Equitable Life scandal and learned a hard lesson from that, so have worked very hard over the years to ensure I'll have sufficient in later years.

You think you know someone but they always surprise you, don't they?

It is (and historically has been) much harder to take a partial transfer than a full transfer. Given what the pension scheme has said it seems likely that a full transfer was taken. I’m not sure how he would have then invested the money in his business though? Did he take a transfer into a SIPP or something else?

Yes. In fact on one occasion I sat and did it with him a couple of years ago.

OP says he hasn't transferred it, but withdrawn it. Which is odd.

Those are the questions I'm going to have to ask him. Thanks all. Just wanted an opinion or two on whether it would have been possible to take £100K+ out of a pension fund/ take it as cash at the age of 43.

And this is why we need the protection offered by IFA advice and this shouldn’t be removed as suggested in another thread calling for a petition. I find it hard to believe he didn’t know….

Well I suppose the options are that
a. He did (somehow) withdraw entire value of the pension 20 years ago but forgot to mention in all the intervening years
b. As above but thought he had only taken part of it out (but surely he would have had pension statements for remaining value?)
c. He hasn't really forgotten but is in denial
d. Pension scheme has messed up and giving him incorrect information (ie he actually still has a pension but they're saying he hasn't) - not impossible but given current level of regulation in the pensions industry this is unlikely
e. Either a. or b. could possibly fall into "mis-selling" pensions advice depending on what advice he sought, what it said, what evidence he has kept, his understanding of the risks of taking the pension early etc.
Difficult for you all round though.

I am not aware of any legitimate way of cashing in a DB benefit in or after 2003 at his age. And non legit ways of doing so would have involved dodgy advisers recommending investments in scam products NOT the persons own business.

It sounds really odd to me. Hence the question about whether he instead took a transfer to a SIPP and then somehow invested his SIPP into the new business

I have no idea whether you can take your pension after 20 years but has he not been checking online? He should have been able to log into the teachers' pension website which should detail everything.

I work in public sector pensions although not Teachers.

He would not have been able to withdraw it aged 43. He would have been able to transfer it to another scheme, so it sounds like he might have done this (and then possibly somehow withdrawn it from that new arrangement - although I’m not sure how because as a pp said the minimum age to withdraw pension funds, except on ill health grounds, is 55).

However - he may have been a teacher for 21 years but was he actually paying into the pension scheme for all that time? It is/was possible to take a refund of contributions on leaving with less than 2 years service - so if he had lots of short contracts he may have just withdrawn the contributions each time rather than leaving it in there and building it up. Or he might have opted out of the scheme when he first started teaching and only joined later so he had less than 2 years in the pension scheme when he left teaching for good.

What you need to do is go back to Teachers’ Pensions and get them to confirm exactly what happened to his money i.e. where it was paid to and on what basis (e.g. was it a transfer or a refund). Good luck!

If it was like the NHS you could get a refund not a withdrawal for all your contributions when you left. Sounds like this is what he did. Never heard of a partial refund only full.

ChessieFL makes a good point. Do you know for sure that he was paying in for 21 years? Did he ever teach part-time? Part-time teachers don't automatically contribute - they have to opt-in.

My guess is he has no pension left. At the time (20 years ago) he was probably confident his business would support him in old age.

He's used online calculators that indicate that his pension should be in the region of £12+k pa, with a £35+k lump sum. Combined with the pension he's accrued since 2009, and his savings, it was looking as if we should be able to retire and splash out next year.

Online calculators or actually based on an annual statement?

I left the NHS 20+ years ago and use statements to calculate the amount I would get. Using online calculators makes me think he just estimated an amount based on his last wage.

He needs to find out how he 'took' the pension. Where was it transferred out to. I would get him to go back and ask for specific details.

Thanks for continued input and thoughts.

I think I may wait a week or two until everyone's back at work and then, if he won't do it himself or won't/ can't reveal what happened, see if I can get the details out of the teachers' pension scheme — though presumably they will insist on only talking to him and not me.

I have a horrible feeling that perhaps he contracted out. I didn't know him when he was teaching, but AFAIA he taught in only two schools. However I do know that his partner at that time had a long period of ill health before she died in the late 90s. I know they suffered financially and lost their home in one of the recessions in the late 80s/ early 90s, so I'm wondering if he opted out of the pension fund at that point. I can imagine that he doesn't want to have to be dragged back to that period in his life and asked to account for decisions made under stress.

My motto when it comes to money is always to assume the worst (the Equitable Life debacle instilled that in me), so I will and if it turns out he has any pension due then it will come as a pleasant surprise.

@Americansmoothie you sound really understanding and supportive. I hope it works out for you both and are able to travel as planned.

The TPS isnt a pension fund as such. There isnt a pot of money that can be withdrawn or even transferred to another pension product. Something doesn’t add up. Were you with him when he phoned the TPS?

I don't think I feel quite as reasonable as I sound, but I've weathered various financial storms in the past and so I'm not going to panic. We will be okay without his anticipated pension income: with it we would have been more than okay, IYKWIM. Thank goodness we're only talking about relatively small amounts and hadn't pinned all our plans on the expectation of £40k+ pa!

I think also think, never having been lucky with money, there's a bit of me that suspected it was too good to be true to expect an ample income in retirement. I'm trying to ignore the voice that says I should have known better than to simply trust what he said about his pension. I've always advocated for women to be financially independent and I am. But I hadn't expected to be in a position where, if I want us to go to Australasia or South America for three months next winter, I'll have to pay for us both...

Has he got any paperwork from the TPS? Any old payslips from when he was working which show contributions being deducted. There is no way he would have been able to cash out and have it paid directly to his own bank account unless it was a refund.

I don't think that's quite right. The pension can't be cashed out, but it can be transferred, using the "Cash Equivalent Transfer Value."

Hope you get some clarity, OP.

When he logs into the Teachers Pensions website, he can check back through old statements. Hopefully, they'll go back as far as 1983.