Pension advice

[Covgal83]

Hiya, now I'm into my 40s (though I know the smart money would have been to do it earlier!) I need to start actually engaging with thoughts about my pension (I'm a teacher, so I've just been rolling with that) and retirement etc. I love my job, but the idea of doing it when I'm past 60 Horrifying, 'Hello fellow kids!' Awkward. Where do I start? Do I talk to a person? Read some literature? Any advice? OH has a better paid job, but probably with a worse pension. We have two kids who are still at primary. Mortgage will be paid off about the same time as we retire so we'll probably down size when kids leave. Very minor savings. We both are ostriches when it comes to to financial future planning.

Anyone know where to start!?

Go on your government gateway account. If you receive child benefit then you will already have an account. There is a section for pensions. It will tell you what your pension will be on a weekly, monthly and yearly basis as the law currently stands

Do your minimal savings represent 6 months expenditure if one of you isn’t earning? If not, and you have any spare money currently, build up that emergency fund. If savings are adequate, and you have spare money - start reading around! MSE, whatever - get some sort of feel for how it all works before you even think about engaging an adviser. There is no rush as you both have pensions, and will be set for a full state pension too I would have thought (but certainly check). Make the right decisions, not quick decisions.

If you're a teacher then presumably you're paying into the Teacher's Pension scheme. That's a pretty good scheme though less good than it was and pension age is now matched to that for the State Pension so at least 68 I think.

As I read the OP you're looking for something to fill the gap between 60 and 68, is that right?

If you work until 60 do you know roughly what the Teacher's Pension will pay at 68? What are the rules on reduction for early payment?

You’ll probably be fine from age 68 as your teaching pension and state pensions will kick in then. The bit to think about is the gap between 60 and 68.

One way of covering this would be to build up a standalone pension pot which is basically just a savings account with tax advantages.

There’s a thing called a SIPP which would be perfect for this (self-invested personal pension). You can set up a direct debit from your current account so money is just redirected into that. The government will top it up by 25% automatically, so for every £80 you pay in the government will add £20.

You have complete control over when to start taking it out, so it’s perfect for bridging the gap until your pension kicks in.

If you want to set up a SIPP there are two main choices you have to make: which platform to use and which funds to invest in.

That’s a bit like having to decide which supermarket to go to and which product to buy. Some products are available at multiple supermarkets.

Popular platforms are ones like Vanguard, Interactive Investor, AJ Bell, Hargreaves Lansdown etc. They all charge a fee for holding your SIPP.

Once you’ve chosen your platform you can start putting money in. You could leave it there as cash but that would be a very poor choice - the idea is to get it to grow and for that you need to invest it in something.

There’s lots of good advice out there to get you started with investing. Meaningful Money has great podcasts teaching you the absolute basics. There are plenty more.

I’d contact Wesleyan, they are free though obvs want you to invest with them but are very experienced in terms of teacher pensions. Depending how far into your 40’s you are and how long you’ve been teaching you might be able to take your pension at 60 because of the final salary part. Register with the tps and look at your statement.

Thank you so much, everyone! So much useful advice as regards placed to get started and ways to look at it!!

Check which one of you and DH has the higher marginal rate of income tax and pile all the additional pension savings in via that person.

I would caution that @Covgal83 said “OH” not “DH”. If that means they’re not married, then she shouldn’t put a penny of her money into a pension in his name!

You can offset other assets to even it up. Split property ownership to reflect pension imbalance etc. Basically split the enhanced pension tax relief between you both.

@Charlie2121 that’s a complicated dynamic situation. I can’t see them doing an annual review of all assets, looking at what the property market has done vs the holdings of the pension, and changing the % split of a property for example. I’d still caution against it.

It’s really not that difficult. If one partner is paying 40/45% tax and the other only 20% you’re wasting huge sums between you if you don’t do it.

We are married! Sorry to muddle!

You can check your benefit statement with TOS and should because there are often lots of errors especially if you’ve had any part time work. Make sure it’s accurate then use their calculators to know what you’re going to get and when. There a Facebook group and David Founrain does superb videos on YouTube about understanding the tps.

@Covgal83
I'm in exactly the same age and situation as you and have just booked a consultation with The Wesleyan who specialise in teachers (and their DHs!) pensions

Log into your teachers pension and look at your benefit statement.
It tells you what you would get if you didn't pay anymore into your pension but retired at your NPA.

Also there is a brilliant Facebook group called Teacher Pensions - Teacher to Teacher (U.K.) run by an amazing ex maths teacher called David Fountain (he was called Diddy Dave on the old TES forums) there is a wealth of knowledge on there plus Dave has created spreadsheets that can predict what you may get if you retire early.

He also has a load of YouTube videos that are very easy to understand.

Honestly, it's totally educated me about my teachers pension. I'm 55 and looking at taking early retirement in the next couple of years.

This is the link for his video on understanding your Benefit Statement

Thanks everyone for the informative posts! Does anyone know if there’s equivalent groups or people like wesleyan for NHS?

Thank you so much!