Teacher Pension Questions

[neonplanet40]

I read through the Scottish Teachers Pension Scheme website which is pretty Dire and lacks detailed information.

Locking at the new scheme which started April 2015. They give an example of a teacher on a £30000 salary. Pensionable pay is divided by 1/57. That equals £526 a year.

Now, I pay about £140 a month. Over a year that equals over £1600. Why is only £536 going towards a pension? Where is the other £1100 going? The website isn't useful and tells you nothing!

I may be missing something so if anyone has any information I'd appreciate it. The website also doesn't say how much the employer pays.

Thanks!

[abaxas]

Bascially if you are under 40 you are paying for the current retired people but won't get anything yourself.

[jim]

I read through the Scottish Teachers Pension Scheme website which is pretty Dire and lacks detailed information.

Locking at the new scheme which started April 2015. They give an example of a teacher on a £30000 salary. Pensionable pay is divided by 1/57. That equals £526 a year.

Now, I pay about £140 a month. Over a year that equals over £1600. Why is only £536 going towards a pension? Where is the other £1100 going? The website isn't useful and tells you nothing!

I may be missing something so if anyone has any information I'd appreciate it. The website also doesn't say how much the employer pays.

Thanks!

It's a bit confusing, but it appears on the EIS website that there are multiple schemes running. There's a CARE scheme which talks about 1/57, but there's also a contribution rate of 8.7% mentioned, alongside a 17.2% employer contribution. Are you definitely sure that you're referring to the same scheme for both the pensionable pay and your contributions?

[neonplanet40]

Yes mate, there is only one scheme now and to the best of my knowledge it is the care scheme. It was also their video I watched that did nothing to help me haha.

I just don't see why they would make it so complicated.

Their 1/57 doesn't relate at all to what I pay per month out of my pay.

[Lucio]

This website looks fairly clear with good examples of how a CARE system works

http://www.pensionsadvisoryservice.o...arnings-scheme

Basically under the pension, your deductions have nothing to do with how your pension accrues, what actually matters is simply how much you earn under the scheme.

So assuming a 30 year career as a teacher, you'd accumulate 30/57th's of whatever your average salary has been over the years you've been contributing.

So that £526 you're talking about, that's what you accumulate to be paid out PER YEAR that you belong to the scheme, so after 2 years, that's 1052 a year you get back, after 10 years, that's a yearly income of £5260 and so on.

If you compare that to what you get back from a private pension annuity scheme, it actually looks favourable

[Zak33]

What Lucio says

It's like a final salary scheme I think

for every year you pay into it, you get 1/57th of a yearly salary when you retire

and £30,000 divided by 57 is .... /drum roll.... £526

If you were to pay £140 per month for 57 years you'd pay in £96k and frankly, to then get a £30k per year pension from it is a very good return in current pension terms!

However .. you'll pay more and more into it over the years as your salary will go up, so your % of salary goes up.... and so will the final salary pension at the end.

You can often also transfer some of your previous pension investments into these schemes to top up the years that you were not doing it.. so lets say you were a builder for 10 years paying into your own pension, then became a teacher... you might be allowed to put your pension pot into the teacher pension fund and gain some of the previous years as though you'd been there.

Im talking in GENERAL terms and have NOT read the fund.. but that's how these work in general terms.

[HalloweenJack]

far far far better than the aweful pension Tesco now give us as a benefit (its a savings account basically @7.5%) I put in 7.5% and Tesco match it - and that's it

[jim]

far far far better than the aweful pension Tesco now give us as a benefit (its a savings account basically @7.5%) I put in 7.5% and Tesco match it - and that's it

TBH that's excellent compared to a lot of company schemes I've seen. In fact one of the best I've seen aside from public sector / defined benefit schemes.

[abaxas]

Got to love the naivety of people in this thread. Under 30 and paying into a pension. LOL

[b0redom]

Serious question Abaxas, why?

I don't have a pension, but only because when I put a ridiculous £1m pension pot into a calculator and assumed that I retired in 20 years it would only give me £50k/year (albeit with a 300k lump sum payout). That 50k wasn't index linked, so the value in real terms would have gone down by 20 years worth of inflation.

Getting an index linked £30k for only £1500/year or so is pretty impressive.

What are you planning on providing you with an income post retirement?

[neonplanet40]

What is the alternative abaxas? If I'm so naive I would love to hear what you suggest? Maybe there is a way for me to get more that I don't know about?

Its easy to make sweeping generalisations.

[Guy]

We're still feeding the troll?

BTL certainly looks far less certain these days.

[TheAnimus]

Pensions will be raided again on the whim of anyone vaguely left wing.

By the time I'm able to retire, the retirement age will have risen to something like 70, with the same life expectancy.

[b0redom]

TBH NeonPlanet, I think you'd be fairly naive NOT to invest in a final salary pension. Yes, it's a massive Ponzi scheme, but as it's taxpayer backed, I can't see a better alternative (and I have been looking).

[abaxas]

The issue is with democracy.

Currently we have a top heavy society with the largest group of people over 50 or in retirement. Hence, they control the purse strings. However, we have had a massive baby boom and in 20 years the largest group will be people in their 20s.

Democracy is always controlled by the largest demographic not the populace as a whole.

Do you really think that the largest group of people, who control everything will want to be paying out for something they are not allowed to have?

[jim]

The issue is with democracy.

No, it isn't.

Currently we have a top heavy society with the largest group of people over 50 or in retirement. Hence, they control the purse strings. However, we have had a massive baby boom and in 20 years the largest group will be people in their 20s.

How is that relevant?

Democracy is always controlled by the largest demographic not the populace as a whole.

How is that relevant?

Do you really think that the largest group of people, who control everything will want to be paying out for something they are not allowed to have?

Since when did 'the largest group of people... control everything'? Voters control everything in a manner, by voting and thus selecting their MP, but you're insinuating that over-50s are in control of direct policy. Which they aren't.

Furthermore, you're suggesting that all pension pay-outs are directly linked to the government. I might concede that public-sector pensions could be changed by the government, but to suggest that on that basis everyone should not bother with the tax breaks and benefits of a defined-benefit scheme is going way too far. Besides which, the vast majority of pensions that under-30s will join are simply tax-free investment vehicles, and not at the whim of anyone other than the owner and investor.

Anyway, hopefully thanks to Zak's post neon has the info he needs, as this is veering way off-topic.